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Ericsson Q4: Sales up, posts loss

Ericsson reported higher-than-expected fourth-quarter results in profit and revenue growth, but warned of long-term political uncertainty in the region as the main concern in the cellular industry.
Written by Zack Whittaker, Contributor

Telecoms equipment maker Ericsson posted a 6.46 billion crowns (US$1.02 billion) fiscal fourth-quarter loss, but on the bright side sales were up by 5 percent year over year and up by 23 percent on the third quarter.

Earnings before interest and tax (PDF), excluding restructuring charges, rose to $4.8 billion crowns--a 17 percent increase year over year.

The loss was expected after Ericsson said in December that it would take an 8 billion crown (US$1.46 billion) charge relating to its semiconductor manufacturer ST-Ericsson, following news that partner STMicroelectrics wanted out of the joint venture. Reuters reported that STMicroelectrics may need up to $500 million to get out of the joint venture as it continues to battle with weak demand and strong competition. The group reported its fifth straight quarterly loss.

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(Credit: Ericsson)

Ericsson said: "We believe that the modem technology, which we originally contributed to the JV, has a strategic value to the wireless industry." Net profit was 1.15 billion crowns (US$209 million) year on year.

Ericsson chief executive and president Hans Vestberg said in prepared remarks:

Our segments showed mixed developments during the year with strong growth in Global Services and Support Solutions, while Networks had a more challenging year. Support Solutions went from losses in 2011 into profitability and together with Global Services represented close to 50 percent of group sales in 2012, compared to 42 percent in 2011.

Ericsson said sales jumped to 66.9 billion crowns (US$12.18 billion) up by 5 percent a year earlier, helped along by investments in North American and Japanese mobile broadband networks.

Looking ahead, Vestberg noted: "While the macroeconomic and political uncertainty continues in certain regions the long-term fundamentals in the industry remain attractive and we are well positioned to continue to support our customers in a transforming ICT market."

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