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Apr-27-2008Ericsson Earnings Drop, but Not as Much as Expected(topic overview)
CONTENTS:
- STOCKHOLM (AFP) — Swedish telecom infrastructure group Ericsson reported on Friday a sharp fall in first-quarter net profit compared to the year-ago figure, but the result beat expectations and sent its share price soaring more than 25 percent in midday trading. (More...)
- The margins were not very strong and technical analysts expected Ericsson to post a net profit of 0.16 Swedish kronor per share. (More...)
- In Stockholm market, the share price of Ericsson was up by 22% as buying continued in the counter after better forecasts and increase in sales for the current quarter. (More...)
- WPP Group, the world's second-largest advertising company, reported first-quarter like-for-like revenue growth towards the low end of forecasts but said trading had held up well in the United States. (More...)
- Net income fell 55% to 2.65 billion kronor ($US445 million), topping the 2.38 billion kronor analysts had anticipated in a Bloomberg survey. (More...)
- In October, Svanberg said third-quarter profit and sales would miss forecasts, a month after telling analysts demand was ''strong.'' (More...)
- The stock was up by 22% on Friday after the results reported a net income of $446 million. (More...)
- Ericsson climbed 2.06 kronor to close at 14.50 kronor in Stockholm, after rising as much as 27 percent earlier. (More...)
- The company also benefited from ongoing 3G rollouts, including major rollouts in Russia and Latin America. (More...)
- The British economy grew only 0.4 percent in the first quarter as the credit squeeze tightens its grip on the. (More...)
- The news is also negative for Samsung, which is also mainly present in the high-end of developed markets. (More...)
- Facebook -- share an item with users of Facebook, a collection of school, company and regional social networks. (More...)
- Competitor Alcatel-Lucent SA, which reports earnings next week, rose 6.4 percent to 4.32 euros in Paris. (More...)
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STOCKHOLM (AFP) — Swedish telecom infrastructure group Ericsson reported on Friday a sharp fall in first-quarter net profit compared to the year-ago figure, but the result beat expectations and sent its share price soaring more than 25 percent in midday trading. For the January-March quarter, Ericsson said its net profit had been more than halved to 2.6 billion kronor (279 million euros, 434 million dollars), down from 5.8 billion kronor a year earlier. The world's leading mobile telecom infrastructure company also saw its operating income drop 47 percent to 4.3 billion kronor, according to its earnings statement. Ericsson's announcement that its operating margin had slumped 14 percent to 9.7 percent meanwhile beat the 9.0 percent margin analysts polled by SME-Direkt had expected for the quarter. [1] A 48 percent drop in profit at the mobile phone joint venture Sony Ericsson also weighed on results. "The question now is whether this is just a one-timer?" said Jacob Pedersen, an analyst at Sydbank. The numbers alone, and without comparing them with analyst expecations, actually showed a "pretty disappointing earnings development compared to the same quarter last year," he said. Pedersen added that the consensus had come down since the Ericssons share started its downward tumble last year. Samsung Electronics said Friday its profit rose 37 percent in the first quarter as strength in mobile phones and liquid crystal displays offset weakness in semiconductors, The Associated Press reported from Seoul. The Japanese electronics maker Toshiba said its profit plummeted 95 percent in the January-March quarter due to costs of its exit from next-generation video HD DVD business.[2]
The group's shares have fallen by 50 percent in just 12 months, and management is trying to slash costs and jobs in anticipation of a flat telecom equipment market in 2008. We already know that mobile profits at its joint venture with Sony fell sharply in Q1, and CEO Carl-Henric Svanberg is under pressure to show he can get to grips with the business following a profit warning late last year that led to the sacking of his CFO. Shares on Thursday rose by over 5 percent, indicating some brave investors out there are betting the worst could be over for Ericsson, but trying to call a bottom for this stock has proved expensive in recent months.[3]
Ericsson has nearly a 50% exposure to the dollar. Ericsson reiterated its outlook for flattish growth in the mobile infrastructure market in 2008 and for good growth in the professional services market. "We still find it prudent to plan for a flattish mobile infrastructure market, " Svanberg said, adding that Ericsson's cost reductions as it adjusts to such a scenario are running according to plan. The company is targeting cost savings of 4 billion kronor annually that will have their full effect in 2009. Ericsson shares have lost more than half their value since the company stunned investors with a profit warning in October.[4] At 0815 GMT Ericsson's shares were up 21%, or SEK2.56at SEK15 following the report's release. Chief Executive Carl-Henric Svanberg said he wouldn't guide beyond the first quarter, which he said is seasonably weak. He said he is seeing strong growth in the emerging markets of India and China, as well as increasing sales in the U.S. Western Europe, however, remains slow. He said the company gained global market share during the quarter from most rivals except the Chinese, saying Ericsson has around 40% of the world's mobile infrastructure market. Ericsson Friday posted first-quarter sales ahead of expectations, maintained its forecast for a flat mobile infrastructure market in 2008 and said cost-cutting measures are on track.[5] A 48 percent drop in profits at mobile phone joint venture Sony Ericsson also weighed on results. Chief Executive Carl-Henric Svanberg said his company "developed well in the quarter, considering the present market environment and the declining U.S. dollar." He said, Ericsson continues "to plan for a flattish development in the mobile infrastructure market" in 2008, but that the professional services market "is expected to show good growth.[6] Honko said Ericsson's operating profit beat the market consensus by about 16 percent. Despite Ericsson's results, he cautioned that the network infrastructure industry was in a "difficult phase." Ericsson Chief Executive Carl-Henric Svanberg said his company "developed well in the quarter, considering the present market environment and the declining U.S. dollar."[7]
"Our business developed well in the quarter, considering the present market environment and the declining U.S. dollar," company president and chief executive Carl-Henric Svanberg said in the statement. The company said its network sales grew by 2.0 percent year-on-year despite the negative impact of the weakened dollar, driven by strong GSM sales in high-growth markets like China and India. Ericsson also saw its professional services business grow by 8.0 percent compared to the year-ago quarter, while its multimedia sales soared 16 percent, mainly due to acquisitions.[1]
STOCKHOLM (Thomson Financial) - LM Ericsson AB's chief executive Carl-Henric Svanberg said the company's first quarter sales in Asia grew by 30 percent with the eclusion of Bangladesh, Australia and Japan. 'Sales were up 30 pct excluding these countries, with China and India particularly strong,' said Svanberg. He attributed the weaker sales performance in Bangladesh to political turmoil, and in Australia and Japan to tough comparisons from the first quarter of last year.[8] STOCKHOLM (Thomson Financial) - LM Ericsson AB's chief executive Carl-Henric Svanberg said the company's margins will remain under pressure in the second quarter due to the high proportion of new network rollouts in the company's mix, particularly from India.[9] STOCKHOLM (Thomson Financial) - LM Ericsson AB's chief executive Carl-Henric Svanberg said price competition played a role in the sharp year-on-year decline in the company's first-quarter network margins. Overall he attributed the margin decline to four key factors -- business mix, the effects of amortization connected to acquisitions, the weaker dollar and price competition.[10]
Speaking at the company's post results conference call Svanberg said India has 'a 100 percent focus' on rolling out new networks, which have lower margins for Ericsson (nasdaq: ERIC - news - people ) than upgrades to existing networks. Referring to the company's first-quarter results today, Svanberg said the most satisfying aspect of the report was organic sales growth, which he said'sticks out' as positive.[9] Ericsson's (nasdaq: ERIC - news - people ) first-quarter results did manage to beat glum expectations, with sales and profits at the top end of forecasts, but it may have been the short-sellers who were especially caught by surprise. "A lot of investors might have been covering their short positions," said Per Ekstrand, analyst with Kaupthing Bank. He said Ericsson's sales growth in the networks division had strengthened investor confidence in the stock, which was still down 40% from trading levels in October.[11] Ericsson's share price has halved since a surprise profit warning last October. These latest figures caused the shares to rise by their most in over five years. The company lowered its forecasts again last November and the Swedish Stock Exchange considered fining Ericsson for breaking its disclosure rules because that profit warning was issued in New York rather than Stockholm. Given the management's recent credibility problems, the company gave a cautious forecast and said the infrastructure market will be flat this year. Analysts believe the stronger sales figures have signalled that conditions may not be as weak as feared and they were happy that Ericsson seems to be more stable.[12] Analysts had expected sales of 42.3 billion kronor (4.5 billion; US$7.1 billion), Dow Jones Newswires reported. Ericssons share price had lost half its value since October when the company shocked investors with a hefty profit warning and a surprise cut in its 2007 outlook forcing its chief financial officer to step down.[6] The company's net sales for the period meanwhile climbed 4.74 percent to 44.2 billion, again beating analyst expectations of 41.8 billion kronor. After issuing its report, Ericsson saw its stock price open up 20.9 percent at 15.02 kronor on the Stockholm stock exchange. By around 1100 GMT, its shares were showing a gain of 26.37 percent to 15.72 kronor in a market up 2.87 percent on average.[1] Forbes.com also noted that, despite profits being halved over the year, falling to Swedish kronor 2.6 billion ($434.3 million), gross margins held up pretty well, dropping only to 38.6 percent despite predictions that the drop would be to 36 percent. Those glimmers of hope were enough to boost Ericsson's share prices, confounding the guesses of short sellers who had valued the company's stock prices quite low.[13] ERIC is now trading at 24.88, up 3.18 (12.79%). The stock hit its 52 week high of 43.41 in July and set its 52 week low of 17.04 in March. LM Ericsson announced this morning its first-quarter profit fell 55 percent to 2.65 billion Swedish kronor ($446 million), or 0.17 kronor a share, beating analysts' forecast for earnings of f 0.16 kronor a share.[14]
STOCKHOLM (Reuters) - Shares in telecom equipment maker Ericsson rocketed more than 20 percent on Friday, their biggest gain in nearly five years, after the company unveiled surprisingly strong first-quarter profits. The earnings were still a far cry from where they were a year earlier, but they beat a set of gloomy forecasts as the market had come to expect negative news from the world's largest mobile network builder since a dismal third quarter.[15] Ericsson, which announced plans in February for sweeping cost savings, said it was taking an 800 million crown charge for restructuring cuts made during the quarter, but that was not included in the main profit and margin figures. The company's shares, which had seen 50 percent of their value stripped away since Ericsson announced an earnings shortfall in October, were up 23.5 percent at 15.40 crowns at 0900 GMT, buoying the broader Stockholm index. It was the stock's biggest intraday rise since July 2003.[15]
Sales for the quarter increased to 44 billion kronor, or $7.4 billion, from 42 billion kronor last year. Earnings were trimmed by a restructuring charge of 800 million kronor and a fall in profits at its mobile phone joint venture, Sony Ericsson.[16] Sony Ericsson Mobile Communications, which is a 50-50 venture between Japan's Sony and Ericsson, said on March 19 that first-quarter earnings and revenue would fall on slower handset sales, higher research costs and a component shortage. Sony Ericsson said this week that first-quarter profit fell to 133 million euros ($US208 million) from 254 million euros a year earlier. Sony Ericsson lost its position as the fourth-largest manufacturer to LG Electronics in the quarter after the 22.3 million handsets it shipped trailed sales of the Asian rival.[17]
While its overall outlook for mobile infrastructure sales may be flat, Ericsson may have found a bright spot in North America, traditionally the region at the bottom of the vendor's revenue chart. In its earnings call today, Ericsson reported North American equipment and services sales grew 39% year over year in the first quarter to 4.3 billion Swedish Kroner (US $719 million) due primarily to wideband CDMA infrastructure sales and high-speed packet access (HSPA) network upgrades. In the U.S., the bulk of those revenues likely came from T-Mobile, which is building a nationwide 3G network for commercial launch this summer, and AT&T;, which has wound up much of its own 3G rollout but is still adding markets and upgrading the existing 3G footprint with faster uplink software.[18] Ericsson just reported earnings of 2.7 billion Swedish crowns (about $460 million, or $1.70 per American depositary receipt ) on 44 billion kronor ($7.4 billion) of revenue. That's a 55% earnings drop year over year and only 4% higher sales, but still much better than Mr. Market had expected -- the stock jumped''today as much as 15% over last night's closing price.[19]
Wireless equipment maker LM Ericsson posted a sharp fall in first-quarter profits, hurt by higher costs, restructuring charges and a weaker U.S. dollar. The Swedish company, which has its North American headquarters in Plano, said it earned 2.65 billion kronor, or $460 million, compared with 5.82 billion kronor a year ago.[16] Swedish wireless equipment maker Ericsson said on Friday that its first-quarter pre-tax income fell by as much as 46 percent, due mainly to rising operating expenses. Pre-tax income for the first quarter stood at 4.5 billion kronor (756 million U.S. dollars), down from 8.3 billion kronor (1.38 billion dollars) registered in the corresponding period of 2007, Ericsson said in its quarter report.[20]
"The results are much better than expected, the sales are higher, the operating margin is better than expected, so it is pretty good and not surprising that the shares are soaring," Handelsbanken analyst Jan Dworsky told AFP. Investors were likely to be especially impressed by Ericsson's 9.0-percent operating margin in its main business, network sales, which was well below the 17 percent margin it reported in the first quarter of 2007 but far better than analyst expectations of 6.0 percent, Swedbank analyst Ronny Jacobsson said. "This is going better than expected," he told Swedish public radio.[1] Ericsson's shares apparently rose in response to the company's first quarter 2008 results released Friday, which showed that the firm, despite expectations to the contrary, pulled ahead with results near the high end of forecasts, Forbes.com said. First quarter sales for Ericsson were up 4.7 percent, boosted in part by emerging-market demand for its network solutions.[13]
Over the first three months of the year, Aviva's total lifeand pensions sales climbed to 8.17 billion pounds ($16.15 billion), beating analysts' average forecast of 8.03 billion. British publisher Pearson, the owner of the Financial Times newspaper and Penguin books, said on Friday it had made a good start to 2008 and was trading in line with its expectations. Staffing company Randstad said its first-quarter net profit rose 3 percent, just short of analyst forecasts, and warned of a challenging market in North America.[21] Sony Ericsson posted a 47% drop in first quarter profits on Apr. 23, reconfirming a slump in high end phone sales in Western Europe and North America and underscoring the challenges ahead for the company'''s new CEO, Hideki '''Dick''' Komiyama. Financial analysts have been sounding the alarm about a drop in demand for high end phones ever since Texas Instruments, a leading supplier of semiconductors for mobile phones, set off shock waves on Mar. 10 by lowering its first-quarter growth estimates for sales of wireless chips and pinned the blame on weakening demand from a major customer for high-end chips used to power third generation (3G) phones.[22] 'We still find it prudent to plan for a flattish mobile infrastructure market,' said CEO Carl-Henric Svanberg. The company's professional services business grew, while its multimedia business lagged due to research investments and the company's stake in Sony Ericsson Mobile Communications, where sales dropped 7% in the first quarter from the year-ago quarter.[23] Carl-Henric Svanberg, President and CEO of Ericsson, commented: 'Our business developed well in the quarter, considering the present market environment and the declining USD." TANDBERG Television and mobile platforms accounted for the 'vast majority' of sales for Ericsson's Multimedia division, and the company reportedly plans to leverage this and invest in new areas for future growth, such as IPTV, IMS and enterprise applications.[24]
Ericsson's chief HSPA rival, Nokia Siemens Networks'which shares the T-Mobile contract with Ericsson' saw sales declines of 21% quarter over quarte r, some of which can be attributed to the weakening value of the U.S. dollar. Ericsson CEO Carl-Henric Svanberg pointed toward more growth potential in the U.S. to come, specifically citing the 700 MHz auction, which raised $19.6 billion in license sales. Verizon Wireless and AT&T both intend to use the spectrum for LTE networks. AT&T; said it intends to use the spectrum for Evolved HSPA, a transition technology between 3G and 4G that adopts elements of LTE such as a flat IP network and multiple antennas while using the same W-CDMA scheme.[18] Nokia reiterated it will achieve 2 billion euros in cost savings annually by the end of 2008 by cutting 15 percent of the venture's workforce. "Still it's a tough battle, but I would say the tough price pressure from traditional vendors is somewhat lower,'' Svanberg said at the press meeting today. Some orders linked to the completed U.S. spectrum auctions may be booked this year, with most mobile broadband rollouts coming in 2009, Svanberg said in an interview in Stockholm. "The U.S. has been a bit slow, but now we have quite a lot of activity around the corner,'' he said in a Bloomberg Television interview. "This may be a sign that mobile data trends are finally strong enough for Ericsson to finally see some growth,'' Henderson's O'Gorman said. "The big strength was in the U.S., where AT&T; rolls out a pretty aggressive HSDPA network,'' he said, referring to high-speed downlink packet access systems that allow wireless Internet browsing and video conferencing.[25] Ericsson closed at 12.17 kronor in Stockholm yesterday. "At the moment there are no catalysts for operator demand,'' said Andreas Mark, a fund manager at Union Investment in Frankfurt, which sold its Ericsson shares after the October forecast. "It's not a growth industry, that's the problem.'' Union Investment might buy back into the stock "if we'll see a better environment, rising demand for mobile equipment and better results,'' he said. "They have to deliver.'' Ericsson anticipates "flattish'' growth in the network industry and "good growth'' for professional services this year, Svanberg reiterated at a press conference earlier this month.[26]
Before today, the stock had lost 53 percent since October after Svanberg cut forecasts twice in the fourth quarter, blaming a slump in North American and European spending. "Most of the market was waiting to buy Ericsson at some stage, but they've had so many gaffes and blowups that people were scared of doing it,'' said Stuart O'Gorman, who helps manage $1.5 billion in technology stocks at Henderson Global Investors in Edinburgh and doesn't hold Ericsson shares.[25]
STOCKHOLM, Sweden (AP) - Shares in wireless equipment maker LM Ericsson surged nearly 17 percent Friday after the Swedish company surprised investors with better-than-expected results in the first quarter, despite a 55 percent drop in earnings.[27] STOCKHOLM, April 25 (Reuters) - Ericsson (ERICb.ST: Quote, Profile, Research ) Chief Executive Carl-Henric Svanberg said the telecoms firm took market share in the first quarter and has about 40 percent of the mobile systems market, according an interview with Swedish agency TT on Friday.[28] Last October, Ericsson issued a shock profit warning, Forbes.com noted, and at the same time unveiled a restructuring plan. In a general meeting earlier this month, the company's CEO and President, Carl-Henric Svanberg ( News - Alert ), told shareholders that results for 2007 were among its best yet, and that the company won market share in most areas it serves. He also stressed the need for long-term perspective, given current market conditions. That sentiment was echoed again by Svanberg Friday in Ericsson's first quarter 2008 report.[13] The market had come to expect negative news from the worlds largest mobile network builder since a dismal third quarter. The companys shares have lost 50 percent of their value since Ericsson announced a profit warning in October. "This was a really nice surprise," said Jari Honko, an analyst at eQ Bank. "This shows that Ericsson is a shining star in the network industry."[2] Ericsson's shares that have been battered since a profit warning last year rose sharply to 15.64 kronor ($2.65) in midday trading. "This was a really nice surprise," said eQ Bank analyst Jari Honko. "This shows that Ericsson is a shining star in the network industry."[7] Investment analysts had been expecting worse numbers. They found solace in a strong performance in the U.S., where sales rose 39 per cent year-on-year, continued strength in emerging markets and a belief that last year's profit warning would not be repeated. Ericsson remains the only profitable company in the mobile infrastructure industry, where it competes alongside rivals such as Alcatel-Lucent and Nokia Siemens.[29]
Sales rose 4.8% to SEK44.18 billion from SEK42.16 billion in the quarter ended March 31, beating analysts' expectations of SEK42.30 billion. Net profit in the quarter fell on poor network sales in developed markets and at its Sony Ericsson mobile phone joint venture.[5] Sony Ericsson is a 50-50 venture with Japan's Sony Corp. The venture, which provides Ericsson with about 25 percent of its operating profit, said April 23 that net income dropped to 133 million euros ($212 million) from 254 million euros a year earlier. Out of the 45 analysts tracked by Bloomberg, at least 21 have lowered their 12-month price targets for Ericsson's stock since Sony Ericsson's announcement.[26] Ericsson shares rose 17% to 14.50 kronor ($2.44) in Stockholm. The company's stock had been hit in recent months by a profit warning from Sony Ericsson, its mobile-phone joint venture with Sony Corp., and by weak results from.[30] Ericsson (nasdaq: ERIC - news - people ) surprised the market with better than expected first-quarter results. The Swedish telecom infrastructure company's stock had fallen by more than 50% since posting dismal fourth-quarter results in May, but Friday's news sent its share price soaring 16.6%, to close at 14.50 Swedish kronor ($2.30) in Stockholm.[31]
The telecom infrastructure provider reported sales of 44.2 billion Swedish kronor, with net income of 2.6 billion kronor or 0.17 a share, slightly ahead of Street expectations. In announcing its results, the company said that its business "developed well in the quarter, considering the present market environment" and the decline in the dollar.[32] Ericsson reported a 2.619 billion kronor after-tax profit for the first quarter 2008 on sales of 44.175 billion kronor, up 5% on the same period 2007, and above market expectations of 41.800 billion kronor.[33] World'''s largest mobile networks maker Ericsson AB reported better-than-expected sales and profit for the first quarter of current fiscal.[34]
April 25, 2008 ' Ericsson has posted sales of SEK 44.2bn (US$7.4bn) for the first quarter of this year, representing an increase of 9% year-on-year, while net profit reached SEK 2.6bn for the period. The company added that sales by its Multimedia division rose 16% in the first three months of this year by the same comparison, largely driven by acquisitions.[24] The company reports an operating profit of 4.3 billion Swedish crowns in the first quarter, a sharp drop from 7.6 billion in the fourth quarter and 8.2 billion a year earlier. That was more than the 3.7 billion mean average forecast in a Reuters poll of 28 analysts, although predictions ranged from 1.5 billion crowns to 5.5 billion.[21] Ericsson made an operating profit of 4.3 billion Swedish crowns ($729 million) in the quarter, a sharp drop from 8.2 billion a year earlier but better than the 3.95 billion average forecast when stripping out assumptions for restructuring costs.[15] STOCKHOLM (Thomson Financial) - LM Ericsson AB reported a 46 percent fall in pretax profit from a year earlier to 4.5 billion Swedish crowns -- excluding restructuring charges of 800 million crowns -- hit by a sharp fall in margins.[35] HELSINKI (Thomson Financial) - Elisa Corp said it expects the number of Finns using 3G services to rise sharply over the next few months. LONDON (Thomson Financial) - Colt Telecom Group S.A. posted a higher first-quarter pretax profit and said it expects 2008 to be another year of progress for its business. WARSAW (Thomson Financial) - Polands second largest telecom Netia should generate an operating profit within three years, and the margin on its EBITDA measure of profit will hit around 20-25 percent in coming years, its chief executive Miroslaw Godlewski was quoted as saying.[35]
The warning had wiped out more than half the company's market value before Friday's numbers. The rally was all the more extraordinary given that Ericsson reported a 55 per cent drop in first-quarter net profit year-on-year to SKr2.6bn ($434m) and the severe contraction of its operating margin from 19.3 per cent last year to 9.7 per cent.[29] With investors apparently expecting dark news from the infrastructure sector, L.M. Ericsson?s stock shot up more than 12% today after the company reported a 5% gain in revenue, a 55% drop in net income and an erosion in gross margins. Add an outlook that calls for a 'flattish' network market this year and the soaring stock calls attention to itself.[23] On Nov. 20 in New York, Ericsson said fourth-quarter sales would be at the lower end of a target range, sending the stock down 11 percent, the lowest in almost four years. "Considering what has happened in the last six to nine months it's really nice to see that they can show good sales and earnings,'' said Greger Johansson, an analyst at Redeye AB in Stockholm, who has an "accumulate'' rating on the stock and might raise it to "buy' following the report. Ericsson announced this year it would cut as many as 4,000 jobs. The company slashed more than half its workforce from the end of 2000 to early 2004 and now employs about 74,000 people.[25] Investors have been worried about the direction of Ericsson's main market, mobile network infrastructure, as telecoms operators have been holding back on capital spending. Even though Ericsson stuck to a view that the infrastructure market would be flat this year, strong sales numbers signaled conditions may not be as weak as feared. "I think the big issue, considering what has happened in the last six to nine months, is that you can see at least from Ericsson's perspective that it's a little more stable," said Greger Johansson, analyst at Redeye, adding the market had perhaps grown too negative after two tough quarters.[15] A weak dollar makes exports more expensive. He said, Ericsson continues "to plan for a flattish development in the mobile infrastructure market" in 2008, but that the professional services market "is expected to show good growth. "Are revenues just being pushed around between quarters or is Ericsson able to gain market share?," he asked. The numbers alone, and without comparing them with analyst expecations, actually showed a "pretty disappointing earnings development compared to the same quarter last year," he said, adding consensus have come down a fair bit since the Ericsson share started its downward tumble last year.[7] Svanberg had said late last year that the first quarter could potentially be the low point in terms of margins, a comment that analysts have asked about on several occasions. Asked at a news conference again about this remark in light of first-quarter earnings, Svanberg repeated that Ericsson is not providing any guidance.[36]
Earnings per share fell to 0.17 krona in the first quarter from 0.36 krona a year earlier. ''The management has been having some credibility issues, so this is a step in the right direction,'' said Mika Heikkinen, a fund manager at Glitnir Asset Management in Helsinki, which oversees the equivalent of $US4.7 billion.[17]
BOSTON (Thomson Financial) - Vonage Holdings Corp. Friday said it signed a non-binding letter of intent with an undisclosed third party to provide $215 million in a private debt financing. NEW YORK (Thomson Financial) - Micrel Inc. Friday urged its shareholders to reject a slate of nominees that Obrem Capital has proposed for election to Micrels board. HONG KONG (XFN-ASIA) - DBS Vickers has cut its target price on China Unicom Ltd to 15 hkd from 15.9, factoring in lower earnings forecasts. PARIS (Thomson Financial) - WestLB downgraded Alcatel-Lucent to Reduce from Hold on the view that the telecoms equipment makers sales mix means its copper wire network sales could be cannibalised by an expected rise in demand for fibre infrastructure. LONDON (Thomson Financial) - WestLB has raised its recommendation on shares in ADVA Optical Networking AG to buy from hold and adjusted the target price for the group to 3.70 euros from 1.50 euros.[37] In October, Svanberg said third-quarter profit and sales would miss forecasts, a month after telling analysts that demand was "strong.'' In November, he cut the sales target again. Earnings at the company have missed analysts' estimates in three of the past four quarters and met them once.[26] The gross margin was especially better than I had forecast," said Hannu Rauhala, analyst at Pohjola. "Even in this very difficult environment for network sales, the figures were quite good." Carl-Henric Svanberg, Ericsson's chief executive, said the company was sticking to its 2008 market outlook.[15] Sales gained 39 percent in North America, where Ericsson supplies AT&T; Inc. and Deutsche Telekom AG's T-Mobile USA. Chief Executive Officer Carl-Henric Svanberg said North American demand is picking up as operators need to upgrade networks after holding back on spending.[25] As for the company's geographical mix, Svanberg said "sales are picking up in the United States while Western Europe remains slow." "The proportion of new network builds in high-growth markets, especially in India, is increasing," he added. Sales in Western Europe, Ericsson's main market, slipped 7.0 percent during the quarter, but its sales soared 39 percent in North America, while they grew 1.0 percent in Eastern Europe, the Middle East and Africa, 5.0 percent in Asia Pacific and 25 percent in Latin America.[1]
Sales gained 39 per cent in North America, where Ericsson supplies AT&T; Inc. and T-Mobile USA. CEO Carl-Henric Svanberg said North American demand is picking up as operators need to upgrade networks after holding back on spending.[38] Ericsson president and CEO, Carl-Henric Svanberg, said that sales in the Networks division grew by 2 per cent year on year despite a negative impact from the decline of the dollar.[39]
Ericsson, the world's largest maker of wireless networks, rose the most in five years in Stockholm trading after reporting first-quarter profit and sales that beat analyst estimates as North American sales surged.[17] STOCKHOLM -- Telefon AB L.M. Ericsson reported a sharp drop in first-quarter net profit, but its shares soared as the wireless-equipment maker posted strong sales growth, maintained its 2008 forecast and said cost-cutting measures are on track.[30] Vedior also reported earnings. Its first-quarter net profit rose by 5 percent, matching market expectations, thanks to robust growth in its main French market. It had a net profit of 46.9 million euros versus an average forecast of 48 million euros in a Reuters poll of five analysts.[21]
Volvo reported pretax profit of 6.14 billion Swedish crowns ($1 billion) versus a year-earlier 5.41 billion and a mean forecast of 5.71 billion in a Reuters poll of 17 analysts. Competitor MAN raised its forecast for 2008 revenue and profitability while reporting first-quarter results that soundly beat market expectations, thanks in part to cost savings.[21]
Even though profits were more than halved over the year, down to 2.6 billion Swedish kronor ($434.3 million), the company's gross margin held up better than expected, dropping to 38.6%, from 43.0%, while many had forecast a fall to at least 36%.[11] Net profit fell 55% to 2.65 billion Swedish kronor ($445.6 million) from SEK5.82 billion in the year prior period.[5] Net profit in the first three months of 2008 was to 2.7 billion kronor ($460 million), compared with 5.8 billion kronor a year ago.[7]
TeliaSonera's results also exceeded analyst expectations with profits up 600 million kronor to 6.6 billion kronor for the first quarter 2008.[33] Sony Ericsson's earnings contributed about 850 million kronor to Ericsson's operating profit of 3.5 billion kronor in the quarter.[25] The venture's earnings added about 1.6 billion kronor to Ericsson's operating profit of 8.2 billion kronor a year earlier.[25]
Sales rose to 44 billion kronor, from 42 billion kronor last year. The earnings were still a far cry from where they were a year earlier, but they beat a set of gloomy forecasts.[2] Sales rose to 44 billion kronor from 42 billion kronor. "This was a really nice surprise," said eQ Bank analyst Jari Honko. "This shows that Ericsson is a shining star in the network industry.''[40] Sales rose 4.7 percent to 44.2 billion kronor, Stockholm-based Ericsson said today.[25] First-quarter sales rose to 44.2 billion kronor (737 million dollars), up five percent from the same quarter of 2007.[20]
Ericsson may say on April 25 first-quarter net income slumped 59 percent to 2.38 billion kronor ($405 million), the average of nine analysts' estimates compiled by Bloomberg.[26] Net income fell 55 percent to 2.65 billion kronor ($445 million), topping the 2.38 billion kronor analysts had anticipated in a Bloomberg survey.[25]
Net income for the three months to March 31 fell 55% to 2.65 billion Swedish kronor ( $446 million ), or 0.17 kronor a share, from 5.82 billion kronor, or 0.37 kronor a share, earned in the year ago period.[4] Though the net income fell by 55 per cent to 2.65 billion kronor ($445 million) but still it is better than the analysts''' estimation of 2.38 billion kronor sales.[41] Ericsson reported $7.4 billion in net sales for the quarter just ended (down 5% year-on-year), with net income of $435 million, down 55% from the year-ago quarter, a figure that included restructuring charges of $134 million.[23] Ericsson, which part-owns mobile handset maker Sony Ericsson with Sony, reported a 55 per cent fall in net income for the three months as restructuring charges and lower sales hit profits.[42] Managed services continued to do well, with revenues increasing 20 per cent year on year, while sales in Professional Services grew by 8 per cent. Earlier this month, handset joint venture Sony Ericsson took a knock that sent its net income down to Eur133m, from Eur254m in the same period last year.[39]
Net sales were up five per cent to SEK44.2 billion, from SEK42.2 billion compared to last year, while net income slipped to SEK2.6 billion from SEK5.8 billion last year.[42]
Sales rose 4.7 per cent to 44.2 billion kronor, Stockholm-based Ericsson said yesterday.[38] The group reported 44.2 billion kronor in sales for the quarter, up 5 per cent on the corresponding business quarter 2007.[43]
Sales may have fallen 1.7 percent to 41.45 billion kronor, according to 21 analysts, the first decline since the fourth quarter of 2003.[26] Sales for the company rose 4.7 percent to 44.2 billion kronor, while analysts had predicted a 1.7 percent slide in revenues.[41]
The company also posted strong sales of 44 billion kronor ($7.4 billion), helped by a recovery in the U.S. Technical indicators for the stock are bullish and steady while S&P; gives ERIC a neutral 3 STARS (out of 5) hold rating. If you'''re looking for a hedged play on this stock, consider an October bull-put credit spread below the $17.50 range. ERIC stock could fall up to 29.7% before expiration and this position would still be profitable.[14] Sales rose to 44 billion kronor ($7.4 billion), from 42 billion kronor in the year-ago quarter.[7] Sales rose 4.7% to 44.2 billion kronor, Stockholm-based Ericsson said today.[17]
Ericsson reported a 4.7% increase in first-quarter sales on Friday, up to 44.2 billion Swedish kronor ($7.4 billion), partly helped by a pick-up in emerging-market demand.[11] Swedish mobile phone network equipment maker Ericsson has reported profit and sales that were well above market expectations.[12] Shares of Ericsson AB, the world's largest maker of wireless networks, surged after reporting first-quarter profit and sales that beat analyst estimates as North American sales surged.[38] STOCKHOLM (Reuters) - Shares in telecom equipment maker Ericsson (ERICb.ST: Quote, Profile, Research ) rocketed by more than a quarter on Friday, their biggest gain in five years, after the company unveiled surprisingly strong first-quarter profits.[44] STOCKHOLM, Sweden (AP) — Wireless equipment maker LM Ericsson AB on Friday said its first-quarter profit fell 55 percent, which was better than expected, and the company's shares soared more than 25 percent.[7]
Investors that engage in a practice called " short selling " -- selling borrowed shares from a securities firm anticipating that those same shares will drop in price, resulting in a profit for the middleman if the drop does occur -- likely were caught off-guard by trading of Ericsson's ( News - Alert ) "B" shares (ERICB.ST) Friday in Stockholm.[13] The stock was dumped by investors after the company issued profit warning in October last year. The share price was hovering around half of their levels before October.[34] Since the second half of last year, shares in the Stockholm-based company have plunged on the back of a surprise profit warning as well as turmoil in the world's financial markets.[7]
The margins were not very strong and technical analysts expected Ericsson to post a net profit of 0.16 Swedish kronor per share. [34] Swedish vendor Ericsson delivered yet more bad news for the industry as a whole on Friday, announcing a 55 per cent drop in net profit for the first quarter.[39] Shares in Ericsson climbed 25 per cent after the network supplier reported better than expected results for the first quarter.[42] STOCKHOLM-Swedish wireless-equipment maker LM Ericsson has reported better than expected results for the first quarter, despite a 55 per cent drop in earnings.[40]
Ericsson (ERIC) shares are sharply higher this morning after the company reported better-than-expected first quarter results.[32] Earnings news dominated Friday's European trade with Sweden's Ericsson's shares up more than 12 percent after the company reported better-than-expected results.[21] BOSTON (Thomson Financial) - Shares of Netgear Inc. tumbled Friday after the Santa Clara, Calif. -based networking products developer reported lower-than-expected first-quarter earnings and said it expects normal seasonality for the second quarter, typically the companys weakest.[37] BOSTON (Thomson Financial) - Shares of Data Domain Inc. rose Friday after the Santa Clara, Calif. -based provider of deduplication storage appliances reported first-quarter earnings above Wall Street estimates.[37]
SAN FRANCISCO (Thomson Financial) - Chartered Semiconductor Manufacturing Ltd. late Thursday reported first-quarter net earnings of $2.39 million versus $6.33 million a year earlier.[35] BOSTON (Thomson Financial) - Concurrent Computer Corp. Friday reported third-quarter net income of $301,000, or breakeven on a per-share basis, compared with a net loss of $2.8 million, or 4 cents a share, a year earlier.[37]
BOSTON (Thomson Financial) - Shares of ScanSource Inc. tumbled Friday after the Greenville, S.C. -based electronic equipment supplier reported a weaker-than-expected third-quarter profit and provided fourth-quarter guidance that was below Wall Streets view.[37] LONDON (Thomson Financial) - SK Telecom is in talks with Nokia about supplying South Koreas biggest operator with handsets, the Financial Times reported. SEOUL (Thomson Financial) - South Korean technology bellwether Samsung Electronics Co Ltd. on Friday delivered first-quarter profit that beat market expectations, easing worries about a flagging memory chip market and a potential management vacuum following the resignation of its group chairman earlier this week.[35]
SEOUL (Thomson Financial) - South Koreas Samsung Electronics Co. Ltd. is expected to report on Friday improved financial results for the first quarter, driven by brisk sales of flat-screen panels and handsets and gains from the wons fall against the U.S. currency.[35] LONDON (Thomson Financial) - Goldman Sachs has upped Tele2 AB. to neutral from sell with a target price rise to 132 swedish crowns from 114 crowns following first quarter results, market sources said.[35]
HOUSTON (AP) -- ConocoPhillips, the third-largest U.S. oil company, said Thursday its first quarter profit rose almost 17 percent as record high oil prices offset disruptions that hurt earnings from its refining operations.[35] BEIJING (XFN-ASIA) - China Mobile Ltd, SoftBank and Vodafone have agreed to jointly set up an innovation lab to promote the development of mobile internet services. DEARBORN, Mich. (AP) -- Despite a surprise profit of $100 million for the first quarter, Ford Motor Co. said Thursday that it still expects to lose money this year as the U.S. auto market deteriorates.[35] Nokia Siemens Loss Nokia Oyj, the world's biggest maker of mobile phones and Ericsson's biggest competitor on networks, booked costs of 100 million euros ($US157 million) for job cuts at Nokia Siemens Networks in the first quarter.[17]
Nokia Siemens, the venture formed with Siemens a year ago, had an operating loss of 74 million euros on sales of 3.4 billion euros in the first quarter.[17] Sales for the first quarter were $7.45 billion, plunging 21% from $9.43 billion a year earlier.[45]
"The sales development in the quarter reflects the demand for mobile infrastructure, especially in high-growth markets. He added that said sales growth and margins in the quarter were hurt by the continued weakness of the dollar. The U.S. dollar has lost about 8% of its value against the Swedish krona so far this year.[4] Ericsson added that sales "are picking up in the U.S." for mobile infrastructure, though Europe "remains slow." ERIC shares this morning are up $3.49, or 16.1% at $25.19.[32] About half of Ericsson's sales were in dollars so a weak dollar rate impacted the group, Svanberg said. Svanberg said Ericsson expected sales in 2008 to remain flat for its mainstay mobile infrastructure products and was continuing with its previously announced programme to cut 4,000 jobs.[43] Svanberg said the company's heightened sales in the three first months of the year reflected growing demand for mobile telephony infrastructure material, especially in high-growth markets like India. "In combination with a weaker U.S. dollar, this continues to put pressure on our margins," he said.[1]
Sales are picking up in the U.S. while Western Europe remains slow." The news comes as Ericsson's chief rivals in the market for wireless infrastructure gear, Nortel NT and Alcatel-Lucent ALU, get set to report their own quarterly results next week.[45] Carl-Henric Svanberg, president and CEO of Ericsson, expressed satisfaction with the result. "Our business developed well in the quarter, considering the present market environment and the declining U.S. dollar," he said in the report.[20] "Our business developed well in the quarter, considering the present market environment and the declining dollar," said Carl-Henric Svanberg, president and CEO of Ericsson. He added: "We still find it prudent to plan for a flattish mobile infrastructure market in 2008."[42] 'Our business developed well in the quarter, considering the present market environment and the declining U.S. dollar. We still find it prudent to plan for a flattish mobile infrastructure market in 2008,' he said. The decline in margins was attributed to new network builds in markets such as India as well as the effects of the dollar's decline.[29]
Earnings, still well adrift from a year ago, beat a set of gloomy forecasts set in train by repeated bad news which followed a dismal third quarter from the world's largest mobile network builder.[44] April 24 (Bloomberg) -- Ericsson AB Chief Executive Officer Carl-Henric Svanberg reduced earnings projections twice in the fourth quarter. The world's largest maker of wireless networks followed that by reporting its biggest drop in profit since 2003.[26] STOCKHOLM, April 25 (Reuters) - Ericsson (ERICb.ST: Quote, Profile, Research ) Chief Executive Carl-Henric Svanberg said on Friday the company was not providing any future earnings guidance.[36]
View Larger Image Carl-Henric Svanberg, chief executive of telecom equipment maker Ericsson, gestures during a news conference before the shareholders meeting in Stockholm April 9, 2008.[15]
"Our business developed well in the quarter, considering the present market environment and the declining," said Ericsson chief Carl-Henric Svanberg.[45]
In Stockholm market, the share price of Ericsson was up by 22% as buying continued in the counter after better forecasts and increase in sales for the current quarter. [34] The sharp slide in Ericsson's share price during the past six months went into reverse on Friday after its first-quarter results sent its shares soaring 17 per cent to SKr14.5 ' their biggest jump in five years, FT reported.[29] Ericsson shares surged on the Stockholm bourse, and by midday had gained some 25 per cent on Thursday's closing price.[43]
Ericsson's shares rose 16.6 per cent to close at 14.50 kronor, ($2.44).[40]
Ericsson's stock climbed by 16.56 percent to close at 14.5 kronor ($2.42) as confidence returned after a winter of turbulence for the Swedish telecom company.[33] Tobacco maker Swedish Match dampened the mood somewhat in the afternoon with weak profits in the first quarter on the back of declining demand in the USA. The firm's stock dropped 4.2 percent to 124.50 kronor by close of trading.[33] Despite a weak North American market Volvo reported profits of 6.5 billion kronor for the first quarter 2008.[33]
Net income in the first quarter actually fell 55%, but investors were relieved that the company did not issue yet another profit warning.[12]
Ericsson issued a surprise profit warning in October 2007 after learning that operating income would drop 39 per cent to SKr5.6bn in the third quarter compared with the previous quarter, despite reassuring the market three weeks earlier that everything was fine.[29] A 48 per cent drop in profits at mobile-phone joint venture Sony Ericsson also weighed on the Swedish company's results.[40] A 48 percent drop in profits at mobile phone joint venture Sony Ericsson also weighed on results.[7]
Honko said Ericssons operating profit beat the market consensus by about 16 percent. Despite Ericssons results, he cautioned that the network infrastructure industry was in a "difficult phase."[6]
The stock recovered some of that lost ground on the Stockholm exchange on Friday, soaring more than 25 percent in intraday trading, before backtracking to close at 14.50 kronor ('1.56; US$2.44), up 16.6 percent for the day. 'This was a really nice surprise,' said eQ Bank analyst Jari Honko. 'This shows that Ericsson is a shining star in the network industry.[27] Strong interim reports from Ericsson, Volvo and TeliaSonera put the Stockholm stock exchange in a bullish mood as the trading week ended on Friday.[33]
Ericsson is due to report in Stockholm, and investors are expecting a massive 55 percent drop in earnings.[3] Ericsson is hardly alone in deciding that earnings guidance does more harm than good; it joins Coca-Cola, Gillette and The Washington Post Co. in declining to give investors more fuel for speculation, Forbes.com said in a February report. Many investors actually are in favor of the move away from earning guidance, Forbes.com said, saying that this information forces a focus on short-term results at the expense of long-term.[13]
"Ericsson earned itself a round of upgrades today," Forbes.com quoted Richard Windsor, analyst with Nomura International, as saying. The report also quoted Per Ekstrand, Kaupthing Bank analyst, as saying that many investors have been covering their short positions, and will probably revise their estimates based on Ericsson's first-quarter performance.[13] Sydbank analyst Jacob Pedersen said the question is whether Ericssons results will continue to impress investors in the second quarter.[6]
Stockholm - Swedish telecommunications equipment maker Ericsson on Friday posted a 46-per-cent drop in pre-tax income for first quarter 2008, but performed better than analysts had estimated.[43] North America was the only region where revenues remained flat for Ericsson between the fourth and first quarters. Sales in its most important region, Western Europe, fell 24% quarter over quarter, and in other regions of the world, sales fell anywhere from 6% (in Asia Pacific) to 38% (in Latin America).[18] The October announcement was followed by Ericsson's capital markets day in New York on Nov. 20, when the company said fourth- quarter sales would likely be at the lower end of a target range.[26]
Ericsson's gross margin, or the percentage of sales minus production costs, shrank to 38.6 percent from 43 percent a year earlier, beating the 35.1 percent analyst estimate in an SME Direkt survey.[25] Sony Ericsson Mobile Communications Ltd. said on March 19 that first-quarter earnings and revenue would fall on slower handset sales, higher research costs and a component shortage.[26]
With no major new products expected in the second quarter, there is little scope for Sony Ericsson to retake lost share.[22] Ericsson shares rocketed more than a quarter, the biggest gain in nearly five years, after the world's largest.[6]
Next time it would be the CEO in the firing line.'' Svanberg built his career at Ericsson on bringing the company back from the brink of bankruptcy after he took over in April 2003. At the start of 2008, analysts said the worst may be over for Ericsson and that demand to upgrade networks to handle video for handsets would help it recover this year.[26] ''Things are going in a good direction.'' Svanberg reiterated the company is planning for a ''flattish'' market for mobile infrastructure equipment such as switches, base stations and antennas this year.[17] Despite warning that a weak U.S. dollar could hurt the company's operations, Ericsson said it continues to plan for a flattish mobile infrastructure market for 2008, while the professional services market is expected to show good growth.[45] Ericsson's chief meanwhile said the company found "it prudent to plan for a flattish mobile infrastructure market in 2008," at the same time as it expected the professional services market to "show good growth."[1]
The company expects flat growth for mobile infrastructure market and higher growth in professional services market in year 2008.[34] The company says is is expecting a flattish mobile infrastructure market in 2008, but with "good growth" in the professional services market.[32]
WPP Group, the world's second-largest advertising company, reported first-quarter like-for-like revenue growth towards the low end of forecasts but said trading had held up well in the United States. The group whose agencies include JWT and Ogilvy & Mather posted better-than-expected revenue growth and said its operating margins and profitability were ahead of budget and last year. [21] The company said it had a 9.7 percent operating margin, down from 19.3 percent a year earlier but higher than forecasts for 8.8 percent. In Sweden, truck maker Volvo posted first-quarter pretax earnings above market expectations and raised its market forecast for Europe, saying order intake there was surprisingly strong.[21]
DETROIT (AP) -- Dow Chemical Co. reported a 3 percent drop in first-quarter earnings Thursday, a result the company considered a strong showing in the face of a 42 percent jump in feedstock and energy costs.[35]
Friday, Reuters ( News - Alert ) reported, Svanberg announced that Ericsson will not be providing any future earnings guidance. This move likely is made to quell short-term speculation about the company's performance, in favor of a longer-term view.[13] Shares of the German company rose a mere 0.3%, to 95.20 euros ($149.43), by the close of play in Frankfurt. Wall Street closed higher on Thursday following strong earnings reports from American insurers and the decision by Merrill Lynch (nyse: MER - news - people ) to maintain its dividend.[31] Shares in the company were, as of about 11:15 a.m. Eastern Time Friday, trading at Swedish kronor (SEK) 14.57 (about $2.44), up 17.12 percent from previous close of SEK 12.44 ($2.08).[13] 'B' shares in the Swedish network supplier jumped 24.1%, or 3 Swedish kronor (50 cents), to 15.44 kronor ($2.58), during midday trading in Stockholm on Friday.[11] Volvo (other-otc: VOLVY - news - people ) shares climbed 3.4% to close at 90.50 Swedish kronor ($15.05) in Stockholm.[31]
Net income fell 55% to 2.65 billion kronor ($US445 million), topping the 2.38 billion kronor analysts had anticipated in a Bloomberg survey. [17] Net profit for the three-month period came to 2.7 billion kronor (290 million; US$460 million), down from 5.8 billion kronor a year ago.[6] The result was however better than market expectations for a pre-tax profit of 3.7 billion kronor (617 million dollars), excluding restructuring profits, according to a survey by a market survey company.[20]
The main reason for the drop in pre-tax income is that the operating expenses rose to 14.1 billion kronor (235 million dollars) from 11.8 billion kronor (197 million dollars) in the previous quarter as a result of the impact of the acquired companies, including amortization of intangibles, and increased R&D; investments, the report said.[20]
Consolidation across the industry was continuing and competition remained "intense", especially from Chinese vendors, the company said. The Swedish telecom giant reiterated that it planned to slash its annual costs by some four billion kronor, with full effect next year.[1] One-time restructuring charges would meanwhile amount to four billion kronor, to "be recognised as each activity is decided," Ericsson said.[1]
Ericsson reported higher costs in the first quarter related to recent acquisitions, restructuring charges and research and development investments.[2] Nokia Siemens, the Finnish-German joint venture, last week reported an operating loss of '74m ($115m) in the first quarter and Alcatel-Lucent is forecast to report a quarterly loss of about '170m next week.[29] A recent report in the UK found that the faltering economy was forcing many companies to cut back on spending in the first quarter of the year.[3] The first quarter "will be weak,'' as the first two quarters of the year will be "a challenging comparison'' to a year earlier.[26]
The first quarter of 2008 included a restructuring charge of 800 million kronor.[4] In the first quarter, the restructuring costs ticked in at 800 million kronor, it added.[1]
The Internet service provider swung to positive earnings for the first quarter, beating analysts' estimates.[45] NEW YORK (AP) - Telecom service providers opened mixed Friday as the broader market slipped, with Verizon up slightly ahead of Mondays earnings results, which analysts expect to be solid.[37]
The 2008 development there was described as "flattish." It is a testament to Ericsson's unique strengths and commanding market share on communications infrastructure that other providers like Nokia (NYSE: NOK ), Siemens (NYSE: SI ), and Alcatel-Lucent (NYSE: ALU ) hardly moved at all on this report. These results may not point to a broad market resurgence after all, and even Ericsson itself prefers to take a long view of the moneymaking opportunities.[19] Last October, the group issued a profit warning that caused the share price to plunge and sparked criticism of Ericsson's management.[43] Goldman Sachs rates Ericsson a "Sell," with a price target of 11 Swedish Crowns a share.[3]
If you're Swedish telecom giant LM Ericsson (Nasdaq: ERIC ), you have to build out low-margin networks before collecting the high-margin payday on software sales.[19] The exuberant market reaction comes despite a cool and quiet update of the near-term market. This quarter was good because of strong network infrastructure sales in places like China, India, and Latin America, where growth is easier to come by than margins.[19] Insurer Aviva beat forecasts with a 5 percent rise in first-quarter sales, helped by growth in U.S. and Asia, but gave one of the gloomiest outlooks yet for a UK market it says will shrink over the coming months.[21] Concerning markets, Ericsson said sales were 'picking up in the U.S. while Western Europe remains slow,' and there was also growth in Latin America and Asia Pacific.[43]
In October, Svanberg said third-quarter profit and sales would miss forecasts, a month after telling analysts demand was ''strong.'' [17] Netherlands-based Randstad, which is taking over Vedior to create the world's number two staffing firm, had 73.3 million euros ($115.5 million) in profit compared with an average forecast of 75 million euros in a Reuters poll of nine analysts.[21] With all three manufacturing divisions reporting sharp improvements, group operating profit jumped 43 percent to 455 million euros ($716.9 million) ''' far better than the average estimate of 397 million from a Reuters poll of 15 analysts.[21]
Vehicle parts manufacturer Haldex continued the positive trend with profits up to 93 million kronor and its stock responded accordingly, up 5.8 percent to 109.00 kronor by close.[33] A positive forecast sent the firm's stock up 3.4 percent to 90.60 kronor by close.[33] The stock has slumped 54 percent since Oct. 16, when the Stockholm-based company's first forecast surprise was announced. "From a fundamental perspective it's undervalued, but I wouldn't buy into the story yet,'' Sal.[26]
The stock was up by 22% on Friday after the results reported a net income of $446 million. [34] "To rebuild trust is tough, to rebuild it in a difficult macro environment is tougher,'' said Patrick Nielsen, a fund manager at Mapfre Inversion in Madrid, which oversees the equivalent of $7.1 billion and doesn't hold Ericsson stock. "They should under-promise and over-deliver. They have to show a string of good quarters'' to warrant buying the stock again.[26]
Analysts surveyed by Thomson Financial were looking for sales of $6.97 billion.[45] LONDON (Thomson Financial) - Mobile phone handset sales increased 14.3 percent on-year to 291.6 million with Nokia once again setting the pace, industry data from IT and telecoms industry intelligence provider IDC shows.[35] LISBON (Thomson Financial) - Portugal Telecom, SGPS, SA plans to invest 120 million euros over the next three years in the digital terrestrial television (DTT) business.[35]
SINGAPORE (Thomson Financial) - Asian stocks were mostly higher Friday, tracking gains on Wall Street overnight after a positive earnings surprise from Ford Motor and an unexpected decline in U.S. weekly jobless claims eased worries about the economy.[35] LONDON - European stocks closed on a high as optimism prevailed following surprisingly good earnings from European giants like Ericsson, Volvo and Man, and a strengthening dollar.[31]
"Ericsson earned itself a round of upgrades today," said Richard Windsor, analyst with Nomura International. He said many analysts would probably revise their estimates based on the first-quarter performance, and that the stock had been valued at a very low level.[11]
Stockholm-based Ericsson in February announced a cost-cutting plan that would lead to thousands of layoffs worldwide. Some of the companys chief rivals, Franco-American Alcatel-Lucent, and Canadas Nortel will release their first-quarter reports next week.[6] Ericsson said that business activity in India and China had increased over the quarter, giving a lift to volume, although the network products in question were not particularly high-margin. The company said that third-generation network rollouts were "ongoing" across the world, including Russia and Latin America, and that the bulk of its research investment went into these 3G networks.[11] Gross margin dropped to 38.6% from 43% a year ago, although it was up sequentially from 36.1%, which Ericsson said was mainly due to the business mix with a high proportion of new network buildouts.[45] 'A lot is happening in India,' Svanberg said of the mobile networks it was delivering there although margins for new systems were initially lower. Political uncertainty was impacting business in neighbouring Bangladesh, he added.[43]
Svanberg said, the company finds it "prudent to plan for a flattish mobile infrastructure market in 2008."[16] STOCKHOLM -(Dow Jones)- Ericsson Friday said the infrastructure business is picking up thanks to demand in mobile infrastructure in high-growth markets, but stopped short of saying the downward trend in profitability had bottomed out going forward.[5] Investors have been worried about the direction of Ericsson's main market, mobile network infrastructure, as telecoms operators have been holding back on capital spending.[44] The world's largest mobile network maker also affirmed it was planning on a flat mobile infrastructure market this year.[21] "The sales development in the quarter reflects the demand for mobile infrastructure, especially in high-growth markets.[45]
SAN FRANCISCO (AP) -- Amgen Inc., the worlds largest biotech company in sales, reported first-quarter profit Thursday that topped Wall Street expectations, though they were nearly flat as sales of Amgens embattled anemia drugs plunged.[35] In February, Ericsson reported the biggest drop in profit since 2003 and said it will cut as many as 4,000 jobs globally. The company, which slashed more than half its workforce between the end of 2000 and early 2004, now employs about 74,000 people.[26]
Honko said Ericsson's operating profit beat the market consensus by about 16 per cent. Despite Ericsson's results, he cautioned that the network-infrastructure industry is in a "difficult phase.''[40] Ericsson stock surged as much as 27 per cent, the biggest gain since at least February 1987.[38]
Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms.[28] Our network comprises business and financial news web sites read by millions of business decision-makers around the world. Barron's is America's premier financial magazine, renowned for its market-moving stories and in-depth reporting.[32] Pre-tax income was 4.5 billion kronor (756 million dollars), down from 8.3 billion kronor in the corresponding business period 2007.[43]
Reported revenue growth rose by 14.1 percent to 1.56 billion pounds ($3.1 billion), which was ahead of expectations at 1.51 billion pounds.[21] Shares in Franco-American rival Alcatel-Lucent rose as much as 8 percent and the news lifted Europe's technology index 4.3 percent.[15] In January, a Bloomberg survey of 28 analysts showed the shares may climb 53 percent to 21.73 kronor in 2008.[26] Consensus forecasts were for earnings of 0.16 kronor a share, according to Bank of America.[4]
Ericsson climbed 2.06 kronor to close at 14.50 kronor in Stockholm, after rising as much as 27 percent earlier. [25] Ericsson''s gross margin reduced to 38.6 percent from 43 percent a year earlier.[41] Group gross margin was 38.6 percent excluding the restructuring charges, compared with 43 percent a year earlier. "It was a great quarter.[15]
The increase made up some of the ground lost after the Swedish telecommunications equipment manufacturer issued a shock profit warning in the third quarter of last year.[29] The company blamed the profit warning on a shortfall in contracts to expand or upgrade existing mobile networks, notably in the U.S. and western Europe.[29] Analysts were expecting worse following an earlier profit warning that sales were slow in Europe.[42] Operating profit fell to 9.7 percent of sales from 19.3 percent, beating the 9 percent analysts in the SME survey had predicted.[25]
RICHMOND, Va. (AP) -- Altria Group Inc. said Thursday its first-quarter profit fell 11 percent, in part because of costs related to the spinoff of Philip Morris International Inc. and relocating its corporate headquarters from New York to Richmond.[35]
Fellow truck maker Man (other-otc: MAGOF - news - people ) also unveiled a glowing first-quarter report that included a 16% sales increase, yet investors remained unimpressed.[31] The company managed to report a 4.8% increase in sales as the demand was higher in North America and Latin American region.[34] The company witnessed increased sales of GSM in high growth markets, especially China and India.[39]
The company also benefited from ongoing 3G rollouts, including major rollouts in Russia and Latin America. Ericsson will be cashing in on several major operators' plans to upgrade their networks to 14.4Mbps and the company will introduce 21Mbps during the second half of the year. [39] "The big test will be the half-year report," Pedersen said, noting that Ericsson was expected to receive a larger portion of revenues from network rollouts rather than from software product upgrades, with higher margins.[6] "The big test will be the half-year report," Pedersen said, pointing to fairly downbeat magagement comments given for the coming quarters. "They indicated that a larger portion of revenues could come from network rollouts rather than from software product upgrades," he said, adding that the margins are greater on the latter.[7]
The British economy grew only 0.4 percent in the first quarter as the credit squeeze tightens its grip on the. [6] Svanberg has said the first quarter "could very well be the low point of how things develop.''[26]
"Our business developed well in the quarter, considering the present market environment and the declining USD," said Svanberg.[39]
Carl-Henric Svanberg, chief executive, said in an interview on Friday that the company now had a 'firm grip' and was holding quarterly calls with all 25 market units globally, allowing it to spot any future sudden downturn earlier.[29] Ericsson ERIC surged in early trading Friday after the Stockholm-based telecom-gear company posted stronger-than-expected first-quarter revenue.[45] Ericsson wasn't the only Swedish company exciting European traders on Friday.[31]
"This was a really nice surprise," said eQ Bank analyst Jari Honko. "This shows that Ericsson is a shining star in the network industry."[6] Ericsson spokesman Fredrik Hallstan declined to comment before the report. "If they are seen to get too bullish too soon it could mean the end for the CEO,'' said Nicolas von Stackelberg, an analyst at Sal.[26]
The news is also negative for Samsung, which is also mainly present in the high-end of developed markets. That leads Richard Windsor, a financial analyst at Nomura Securities, to conclude that it too is likely to not fare very well this quarter. [22] The stumbles led to Chief Financial Officer Karl-Henrik Sundstroem stepping down on Oct. 25, and the stock has fallen 36 percent in six months.[26] TeliaSonera's stock had climbed 6.7 percent to 52.50 kronor by close of trading.[33] Stockholm stock exchange's OMXS index climbed by 2.7 percent to 321.5 points at close of trading on Friday afternoon.[33]
"The market conditions aren't good,'' said Wing-Yen Choi, an analyst at Theodoor Gilissen in Amsterdam, who recommends investors hold the stock.[26] Mr Svanberg used moderate language to steer investors' expectations in the coming year.[29]
Income came in at SEK2.6bn, while sales grew 5 per cent per cent year on year to reach SEK44.2bn.[39] Truck maker Volvo reported an impressive 26% increase in first-quarter sales.[31]
Facebook -- share an item with users of Facebook, a collection of school, company and regional social networks. [32] In Britain, Alliance and Leicester (other-otc: AANCF - news - people ) shares led the charge, rising 4.4% to 514 pence ($10.19) by the end of trading.[31]
Competitor Alcatel-Lucent SA, which reports earnings next week, rose 6.4 percent to 4.32 euros in Paris. [25] The handset market is still expected to grow at 10% year-on-year in unit terms but with a greater emphasis on less expensive low-end phones, where Sony Ericsson only has a small presence.[22] '$20 billion U.S. dollars paid for the right to use spectrum,' Svanberg said.[18]
SOURCES
1. AFP: Ericsson posts sharp profit fall but beats expectations
2. Ericsson shares soar as profit beats expectations - International Herald Tribune
3. European Markets and Earnings - Technology * Europe * News * Story - MSNBC.com
4. UPDATE: Ericssons Shares Soar On Better-than-forecast Sales, Profit
5. Ericsson Ceo Says Infrastructure Business is Improving
6. Shares in Ericsson soar after 1Q report - International Herald Tribune
7. The Associated Press: Ericsson shares up jump 25 percent on 1Q report
8. Ericsson says Q1 Asia sales grew 30 pct excluding Bangladesh, Australia, Japan - Forbes.com
9. Ericsson CEO Svanberg sees margins remaining under pressure in Q2 - Forbes.com
10. Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
11. Don't Sell Ericsson Short - Forbes.com
12. EuroNews EuroNews : Ericsson's figures better than expected
13. Ericsson Shares Rise Following Release of Q1 2008 Results, 'Short Sellers' Taken by Surprise
14. LM Ericsson Telephone (ERIC) NewsBite - ERIC Reports Stronger-Than-Expected Profit
15. Ericsson shares rocket as Q1 tops forecasts
16. Ericsson reports 55 percent profit drop - Dallas Business Journal:
17. Ericsson surges as earnings top estimates | smh.com.au
18. Ericsson North America sales get a boost
19. Watch Ericsson Fall, Then Ride It Back Up
20. Ericsson income falls sharply in Q1 2008 - People's Daily Online
21. European Earnings: Ericsson Shares Soar - Companies * Europe * News * Story - MSNBC.com
22. Europe Insight Sony Ericsson's profits slump along with sales of 3G phones - BusinessWeek
23. Ericsson flying high after modest gains - RCR Wireless News
24. IPTV News
25. Bloomberg.com: Worldwide
26. Bloomberg.com: Worldwide
27. Shares in Ericsson soar after 1Q report
28. Ericsson CEO says took market share in Q1 -TT agency | Industries | Technology, Media & Telecommunications | Reuters
29. Trend Capital : Ericsson beats profits forecasts
30. Free Preview - WSJ.com
31. Oil Can't Ruin Europe's Party - Forbes.com
32. Tech Trader Daily - Barron's Online : Ericsson Shares Rally On Strong Q1 Results
33. The Local - Ericsson report boosts stock exchange
34. Ericsson shares surge after better-than-expected results | Stock Watch
35. TFN NEWS BRIEFING: TMT highlights to 09:10 BST | Latest News | News | Hemscott
36. Ericsson says not providing any earnings guidance | Markets | Markets News | Reuters
37. TFN NEWS BRIEFING: TMT highlights to 15:40 BST | Latest News | News | Hemscott
38. Ericsson shares surge
39. telecoms.com
40. TheStar.com | Business | Income ahead of forecast sends shares rising 17%
41. Ericsson shares rise 27%; sales, profit results beat analysts''' estimations
42. Ericsson shares rise on better than expected results
43. Ericsson Q1 pre-tax profits down by half, shares up (Roundup) - Business
44. Ericsson shares rocket as results tops forecasts | Technology | Reuters
45. Ericsson Shares Take Flight | Telecom | ALU CSCO ERIC JNPR NT - TheStreet.com
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