Sunday, 26 February 2017

Ericsson pucked

By Nick Wood, Total Telecom
Thursday 26 January 17

Swedish kit maker invokes the wisdom of ice hockey legend Wayne Gretzky after reporting Q4 loss, 11% slide in revenue.

Ericsson on Thursday invoked the wisdom of ice hockey legend Wayne Gretzky as it looks to get its skates on and revive its ailing fortunes. The Swedish kit maker, led by CEO Börje Ekholm for just over a week, revealed that it is reviewing its operations in order to focus investments on where the company can &ndash…

Ericsson on Thursday invoked the wisdom of ice hockey legend Wayne Gretzky as it looks to get its skates on and revive its ailing fortunes.

The Swedish kit maker, led by CEO Börje Ekholm for just over a week, revealed that it is reviewing its operations in order to focus investments on where the company can – and must – win.

"Building on the suggestion from the famous ice hockey player Wayne Gretzky; we will focus on skating where the puck will be, not where it has been," Ericsson said, in a statement.

Ericsson will need all the help it can get, after reporting fourth quarter and full year results that left it firmly in the sin bin.

The company generated revenue of 65.2 billion kronor (€6.9 billion) during the three months to 31 December, down 11% year-on-year. Full year revenue fell 10% on 2015 to SEK222.6 billion. As expected, the decline was attributed to lower spending on mobile infrastructure, and macroeconomic weakness in developing markets.

The slowdown, coupled with restructuring charges and falling patent licensing revenues, meant Ericsson swung to a fourth quarter loss of SEK1.6 billion, compared to a year earlier profit of SEK7.0 billion. Full-year net income fell to SEK1.9 billion from SEK13.7 billion.

Ericsson's closely-watched gross margin narrowed to 26.1% in the fourth quarter; a year earlier it was 36.3%. Its 2016 gross margin was 29.8%, compared to 34.8% in 2015.

Börje Ekholm, who became Ericsson's new permanent CEO following the departure last year of Hans Vestberg, will have some difficult decisions to make as he looks to steer the company back on course.

"Stability will be key to establishing a strong base for future growth," Ericsson said. "This means prioritising profitability over growth, but also to diligently continue to work on efficiency and effectiveness across all operations. This can and will ensure that we remain at the forefront of technological development – building on the combined strength across products, services and solutions."

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