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Ericsson disappoints, says better to come

Wednesday, April 23, 2014 - 01:44

April 23 - Ericsson off target as Q1 sales and earnings come in below forecasts. CEO Hans Vestberg tells Reuters that recent contract wins should help the Swedish telco return to form later this year. David Pollard reports.

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Its shares were down after the Swedish telco Ericsson announced disappointing sales and profits. But not, entirely, its spirits. Boss Hans Vestberg told Reuters that - as an operator in 180 countries - it's used to the shifting fortunes of local markets. The worse-than-expected results come from a recent focus on lower margin infrastructure 'coverage' projects - that's the hardware side of things. Now, the focus is turning to 'capacity' projects - they're more software-based and more profitable. SOUNDBITE (ENGLISH) HANS VESTBERG, CEO, ERICSSON, SAYING: ''Right now in the first quarter we have the same tendency as the second half of 2013 with lower sales but better profitability. That's how it goes up and down a little bit when it comes to our infrastructure business. It's capacity and coverage projects going in different phases.'' Ericsson hopes a raft of 4G projects in Asia and Europe will feed through to better numbers later in the year. For the time being, 'though, it's unveiled quarterly earnings substantially below forecasts. Sales too came in around four billion Swedish crowns shy of estimates. Weak demand in North America and Japan was a factor. But it surprised some analysts when asked about tensions between Ukraine and Russia - where it supplies two major operators, Vimpelcom and MTS. SOUNDBITE (ENGLISH) HANS VESTBERG, CEO, ERICSSON, SAYING: ''We had no impact on our business in Russia and Ukraine. Of course, we have some 1,000 employees in Russia and some 200 employees in Ukraine - there have been days in Ukraine when our employees have been working from home. But from the business point of view we have not seen any impact at the moment.'' Profitability was above expectations - rising to 36.5 percent for the group. And it says the Vodafone Project Spring contract - under which it will upgrade and build Vodafone networks - should also start paying off later this year.

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Ericsson disappoints, says better to come

Wednesday, April 23, 2014 - 01:44