Mobile market has definitely stabilised, claims Ericsson

6 Feb 2004

Ericsson, one of the world’s biggest communications equipment makers, has claimed that the mobile infrastructure market has definitely stabilised on the back of a return to profitability in the fourth quarter following a year of aggressive cost cutting.

Net income amounted to 140m Swedish kronor (€15.2m) in the three months to December from a loss of 8.3bn kronor (€900m) a year earlier. Sales fell 1pc to 36.23bn kronor (€3.9m).

Ericsson predicted moderate year-on-year growth in the forthcoming first quarter, but will show a sequential decrease due to “seasonality”.

“The mobile infrastructure market has definitely stabilized, traffic continues to grow and operators are increasing their focus on network quality and capacity. The year ended with strong sales and we continue to further enhance our leading position,” said Carl-Henric Svanberg, President and CEO of Ericsson.

“Significant improvements in operating profit, gross margin and cash flow have been achieved through increased efficiency and cost of sales reductions. This is the result of the focus on returning the company to profitability including the accelerated efforts in reducing cost of sales. Although the major restructuring is over, with minor adjustments remaining to be completed, by the third quarter 2004, our relentless work to increase efficiency and cost awareness will continue.”

Svanberg went on: “As market leader we have together with our customers gained key learnings in the early stages of the 3G rollout. This experience provides important advantages and we are encouraged by the 3G sales during the quarter. This year will be important for our industry as commercial launches of 3G gather speed in preparation for a mass market in 2005.

“We have the most comprehensive experience from all around the world and in all standards. Our leading position in both 2G and 3G is a decisive competitive advantage in supporting operators in all markets and phases of development. We have built this strong position on our cutting-edge technology, large volumes with economies of scale and our ability to offer end-to-end solutions.

“Understanding consumer needs is increasingly important in this industry. The key challenge for both operators and us, as a business partner, is to understand which services consumers want, what they are willing to pay for them, and how to adapt business models accordingly. We must support our customers and partners in developing their business, choosing the right technology and operating it most efficiently. This will continue to be a key focus area going forward,” Svanberg concluded.

By John Kennedy