Ericsson's full year net income plunges 65 percent

Stuart Corner
Monday, 25 January 2010 13:39

IT Industry - Strategy

Ericsson has reported a 65 percent decline in net income for the year to 31 December 2009, despite significant sales growths in North America resulting from the acquistion of Nortel businesses and a multibillion dollar outsourcing contract from Sprint. Fourth quarter net income was down 81 percent on the previous corresponding quarter.


President and CEO, Hans Vestberg, put a positive spin on the result saying: "We maintained market shares well in all segments, cash flow was good and our financial position is strong. The services business performed well, and our joint ventures remain on track to return to profit."

He said that, during the second half of 2009, sales of network equipment had been impacted by reduced operator spending in a number of markets. "Group sales for the full year were less affected and the operating margin increased slightly... Current operator investment behaviour varies between regions and countries. During 2009, operators in a number of developing markets, especially Central Europe, Middle East and Africa, became increasingly cautious with investments.

"Meanwhile, other markets including China, India and the US continued to show good development with major network buildouts. There is also a continued strong demand for services targeting the operational efficiency of operators, such as managed services and consulting."

He added: "The shift from voice telephony to mobile broadband investments continues...With this shift follows the anticipated decline in GSM sales, accelerated by the current economic climate, which is not yet offset by the growth in mobile broadband and investments in next-generation IP networks."

Net sales for the year were 206.5b Swedish Krona ($A31.5b) down one percent on 2008 and net income SEK4.1b, compared to SEK11.7b in 2008.

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