\tEricsson CEO Borje Ekholm (pictured) emphasised the vendor remained on track to deliver on long-term growth targets, highlighting strength in its underlying business during the third quarter, a period when earnings were hit by a significant financial penalty [1] in the US.<\/p>\n
On a call with analysts, Ekholm noted Ericsson continued to execute on a strategy outlined in 2017, ending Q3 with a strong net cash position of SEK37 billion ($3.8 billion) despite headwinds associated with an SEK11.5 billion settlement with the US Securities and Exchange Commission (SEC) and Department of Justice (DoJ).<\/p>\n
In addition to the US troubles, the Ericsson CEO also highlighted broader headwinds in terms of global political uncertainty. He noted this was having an impact on customers, with some delaying investment decisions, though this had yet to impact its order book.<\/p>\n
Break down
\nEkholm emphasised cash flow remained strong during Q3, stating the company maintained a \u201cgood gross margin\u201d despite adjustments made for the US settlement and absorbing the impact of a dilution in strategic contracts.<\/p>\n
He highlighted an improvement in figures from its Digital Services business unit, noting Ericsson remained focused on creating a \u201cstrong unit in the long term\u201d rather than targeting the \u201cfastest possible turnaround\u201d. Operating loss declined from SEK1.8 billion in Q3 2018 to SEK0.7 billion, with revenue up 10 per cent to SEK9.9 billion.<\/p>\n
The Emerging Business unit took a hit, with an operating loss of SEK11.3 billion up from SEK1 billion and sales of SEK1.6 billion down 33 per cent. Ekholm remained bullish, noting the unit was generating \u201cgood growth\u201d, with IoT a particular highlight.<\/p>\n
Revenue at its Managed Services business declined 2 per cent to SEK6.4 billion, though operating income improved 37 per cent to SEK0.6 billion.<\/p>\n
The Networks unit generated growth across the board: operating income grew 28 per cent to SEK7.2 billion on sales of SEK39.3 billion, up 9 per cent. Ekholm said he was encouraged by the \u201cstrong growth we see in our new growth portfolio to combat decline in the legacy portfolio\u201d.<\/p>\n
In an interview, Fredrik Jejdling, EVP and head of Business Area Networks, told Mobile World Live the portfolio shift is evident in the \u201cpositive trends\u201d from the Digital Services business during Q3, explaining the vendor is beginning to \u201cput less effort\u201d on legacy R&D to focus on growing its new business areas.<\/p>\n
Jejdling hailed stability in the Networks unit, pointing to continued 4G contract wins alongside emerging 5G business, which he credited for delivering improvements in Ericsson\u2019s gross margin.<\/p>\n
Overall, the vendor\u2019s net income was inevitably impacted by the hefty US settlement, slipping to a loss of SEK6.9 billion from a SEK2.7 billion profit in Q3 2018, on revenue of SEK57.1 billion, up 6 per cent.<\/p>\n[1] https:\/\/www.mobileworldlive.com\/featured-content\/home-banner\/ericsson-braces-for-1b-hit-to-settle-us-corruption-case\/<\/p>\n","protected":false},"excerpt":{"rendered":"
Ericsson CEO Borje Ekholm (pictured) emphasised the vendor remained on track to deliver on long-term …<\/p>\n
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