Ericsson Warns on Growth
Ericsson’s shares had fallen 5.6 percent at press time to SEK 21.9 ($3.04) per share.
The Swedish vendor made an SEK 7 billion ($972 million) pre-tax profit in the July to September period, more than six times the SEK 1.1 billion ($153 million) figure it posted a year ago. Net sales rose 14 percent year on year, to SEK 31.8 billion ($4.4 billion).
Ericsson reported third-quarter earnings of €0.30 ($0.04) per share, above the average market forecast of €0.29.
These strong financials were tainted, however, by warnings that market growth in 2005 would slow from this year’s levels. Total orders booked rose just three percent year on year to SEK 29 billion ($4.03 billion), a 13 percent fall compared to the second quarter of last year.
CEO Carl-Henric Svanberg told a press conference in Stockholm that recent growth in the infrastructure market had been the result of “operators catching up on previous years’ limited investments. This effect has started to abate and we expect the market to gradually return to a more normal growth pattern.”
Svanberg expects the global market for mobile systems to show “slight growth in 2005,” compared with a “slight to moderate growth” forecast made last quarter (see Ericsson Impresses Again).
“Ericsson produced a strong set of results but it looks as if the acceleration and recovery phase is over,” writes Dr Richard Windsor of Nomura Holdings Inc. in a research note. “Ericsson is doing very well but expectations appear to have caught up with the momentum.”
— Justin Springham, Senior Editor, Europe, Unstrung