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Thursday, July 19, 2012

Ericsson will ’muddle through’ as income falls

Mark Bridge writes:

I spend much of my time writing about telecommunications and technology. I spend a fair amount of time dealing with big technology-related companies. Yet although I understand many aspects of telecoms, I certainly wouldn’t want to run one of those businesses. It’s a question of relevant experience.

So when Ericsson - for example - puts out its quarterly results, I just only really scan the top-level stuff.

Sales up 1% from the same quarter last year. Sales up 9% from the previous quarter. More sales = good news, I’d say.

Hang on. Net income is down 63% from this time last year. That’s what most people call ‘profit’, right?  It’s now 1.2 billion Swedish Krona (around £110 million) but in Q2 2011 was 3.2 billion Krona.

Not good. What’s the problem?

I turn to Bloomberg.com for an explanation. It’s been talking to Ericsson’s CEO Hans Vestberg. Apparently networks are now spending less and are also upgrading older kit rather than buying new equipment.

”We just need to muddle through this and execute on our strategy, while also lowering our costs as we come out of this”, it quotes Mr Vestberg as saying. Yes, muddle through.

Perhaps I’m Chief Executive material after all.

[Ericsson report (pdf)]

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Author: The Fonecast
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Categories: Networks and operators, OpinionNumber of views: 1031

Tags: opinionericsson

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