Ericsson eyes steady growth despite global downturn

STOCKHOLM Tue Nov 6, 2012 3:18pm IST

The exterior of Ericsson's headquarters are seen in Stockholm April 30, 2009. REUTERS/Bob Strong

The exterior of Ericsson's headquarters are seen in Stockholm April 30, 2009.

Credit: Reuters/Bob Strong

Related Topics

Stocks

   

STOCKHOLM (Reuters) - Telecoms gear maker Ericsson expects slower expansion in the more profitable services segment of its business and the same level of growth in its core mobile network equipment market, it said on Tuesday.

Competition and increased product commoditisation have pressured prices in the industry for years. Europe's debt crisis and weaker global growth squeezed vendors further.

The result is that Ericsson has seen profitable network sales slipping while it has gained from telecoms carriers outsourcing many of their operations, boosting sales of services like network management.

"This development will naturally imply a future business mix for Ericsson with more recurring software and services revenues," CEO Hans Vestberg said in a statement.

"However, hardware will always be part of the mix and a key differentiator for Ericsson."

Ericsson said it expected the market for telecoms equipment to show compound annual growth of 3-5 percent over the 2012-2015 period, the same as its previous forecast for 2010-2013.

The company, the world's biggest supplier of mobile network infrastructure, said it expected growth of 4-6 percent in key segments of the overall market, but saw a slightly slower expansion in services compared to recent years.

Services have grown rapidly in recent years and hit 45 percent of group sales in the third quarter.

In the third quarter, Ericsson's core profit fell 42 percent due to slower orders and a shift in business mix to less profitable contracts.

The company repeated that it expected this mix to continue over the next 3 to 4 quarters.

Rivals have also been suffering. Alcatel-Lucent said it may sell assets to strengthen its balance sheet after posting a second straight quarterly loss.

(Reporting by Niklas Pollard; editing by Patrick Lannin)

FILED UNDER:
Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

E-commerce Impact

Reuters Showcase

Alleged Spy Caught

Alleged Spy Caught

Arrested Indian accused of passing secrets to Pakistan's ISI  Full Article 

Mining Sector

Mining Sector

India to open coal to commercial mining firms soon, minister says  Full Article 

Uber in Delhi

Uber in Delhi

Uber back in Delhi; govt says must await approval  Full Article 

Coal Mining

Coal Mining

India to open coal to commercial mining firms soon, minister says  Full Article 

Saudi King

Saudi King

Obama, world leaders head to Saudi Arabia to offer condolences  Full Article 

Movie Review

Movie Review

Dolly ki Doli is a breezy watch, writes Shilpa Jamkhandikar.  Full Article | Related Story 

Obama's India Trip

Obama's India Trip

Obama to cut short India visit, fly to Saudi Arabia - sources  Full Article 

Inspired by Thackeray

Inspired by Thackeray

Shiv Sena stokes the anti-immigrant debate on celluloid  Full Article 

Akshay Kumar's Latest

Akshay Kumar's Latest

"Baby" is a smartly written, well-acted film  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage