yike 12/5/2012 | 5:44:40 PM
re: Ericsson Suffers Margin Crunch profit is important。
Mark Sebastyn 12/5/2012 | 5:44:39 PM
re: Ericsson Suffers Margin Crunch

Not a good sign when your services business (supposedly the high margin business you want) grows this much, yet your top line margins go down. Either the service margins aren't what they are cracked up to be, or pricing on hardware took a big hit.

digits 12/5/2012 | 5:44:36 PM
re: Ericsson Suffers Margin Crunch

I'm not sure Ericsson has hit any high-margin Services business yet.... and again, the Services division comprises a number of services strands (managed, professional, network rollout) that likely deliver variable average operating margins.


From where I am sitting (as a journalist and not an analyst), Services delivers a more constant and predictable revenue stream but with lower average margins than, for instance, network capacity upgrade business, which appears to be at a premium at the moment.


But whether it's services or equipment/technology, aren't companies such as Ericsson destined for a lower margin future (as in, lower than historical averages)? I'd be gobsmacked if any of the major vendors can continue being large companies (with annual revenues of $15-20 billion and above) AND grow their margins unless they manage to discover totally new business lines that are beyond the currently recognized 'adjacencies' (such as enterprise tech).

The rather worrying thing for the industry is that Ericsson is healthier financially than most (again, in my view as a non financial analyst). 

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