Ericsson sees recovery in tough market climate

01 February 2013 | Kavit Majithia


A revival of sales in Ericsson’s core network business is aiding a recovery for the Swedish vendor despite operating in difficult market conditions.

Shares rose in an 18-month high after Q4 sales had beaten expectations, and was helped by increasing demand in North America.

The company’s network division builds mobile networks for telecoms operators.

Despite positive results, the company’s chief executive, Hans Vestberg, noted caution and believes a pattern will again emerge where the company will struggle in the first half of the year, but improve in the second half.

Q4 revenues in Ericsson rose 5% year on year, and 23% from the previous quarter.

Operating margins also rose to 7.1% from the previous quarter, largely driven by increased sales in its networking division.

The company’s strategy of late has focussed on building more masts and other equipment to provide operators with geographical coverage.

Although this has proved fruitful, it remains a less profitable business for the company compared to securing contracts for increasing network capacity for operators.

European operations for Ericsson have revolved around carrying internet services for next-generation devices which remains a highly competitive market, particularly with Huawei and ZTE competing for market share.