Ericsson's networks unit recovers, shares rally

In China, Ericsson is selling equipment for a massive rollout of fourth-generation mobile networks


STOCKHOLM (Reuters) - A recovery in Ericsson's <ERICb.ST> network equipment business pointed to strong results for the rest of the year, propelling its shares toward their biggest daily gain in more than three years.

In China, Ericsson is selling equipment for a massive rollout of fourth-generation mobile networks. In developed markets, it is benefiting from capacity upgrades as network operators cope with a surge in mobile data traffic.

Ericsson expects recent contract wins to boost revenue during the second half of the year.

"To us, industry fundamentals will strengthen as mobile broadband networks mature, allowing Ericsson and its peers to present higher profitability," ABG Sundal Collier said in a research note, repeating a "buy" rating on Ericsson shares.

Comparable sales in networks grew 5 percent to a forecast-beating 29 billion crowns, the fastest growth for the unit in a year, following a 10 percent drop in the first quarter.

"After a slow start of the year, we are executing on previously awarded 4G/LTE contracts in Mainland China and Taiwan," Chief Executive Hans Vestberg said on Friday.

Ericsson's figures bode well for smaller peers Nokia <NOK1V.HE> and Alcatel-Lucent <ALUA.PA>, which report earnings this month. Demand was robust in North America, where Alcatel-Lucent is particularly present.

Ericsson shares were up 8.1 percent at 0943 GMT (5.43 a.m. EDT) . Shares in Finland's Nokia were up 2.6 percent whereas Paris-based Alcatel-Lucent shares rose 4.0 percent, putting the trio among the top six performers in the European FTSEurofirst 300 index <.FTEU3>.

Operating income was 4.0 billion Swedish crowns ($585 million) compared to 2.5 billion in the year-ago quarter, beating a mean forecast of 3.7 billion in a Reuters poll of analysts.

Sales were 54.8 billion crowns against a forecast of 52.5 billion, down by 1 percent from the year-ago quarter on a comparable basis - a much smaller decline than the 7 percent fall in the first quarter.

Ericsson's gross margin, a measure of underlying profitability which is keenly watched by analysts, was 36.4 percent against a mean forecast of 35.4 percent.

Nokia reports results on July 24, and Alcatel-Lucent a week later.

(Additional reporting by Leila Abboud in Paris and Vikram Subhedar in London; editing by Tom Pfeiffer)


Featured Big Data Reports

Market Opportunity: Big Data in the Internet of Things
Big Data and Analytics software and applications will play a crucial role in making IoT a success. The data generated through sensors embedded in various things/objects will generate massive amounts of unstructured (big) data on real-time basis that holds the promise for intelligence and insights for dramatically improved decision processes.


Structured and Unstructured (Big) Data in Telecom Analytics
This report provides the reader with a broad understanding of telecom data (structured and unstructured/big data) and related analytics. The report identifies market drivers and opportunities as well as forecasts for certain key growth areas such as deep packet inspection.


Telecom Carrier Big Data Operations, Applications, and Services
Telcos have a major advantage in that they have many sources of data but if they want to monetize that data and derive meaningful, actionable analytics it could be challenging due to the complexities of correlation, prediction, and the massive volumes of data from different sources.


Affordable Market Reports on Big Data, IoT, CDN & More!
Access the exclusive new series of market research reports brought to you through the partnership of Mind Commerce research and
Browse the latest titles




Featured Events & Partners

The Telecom Exchange (TEX)
Wednesday, June 24, 2015

Cipriani Wall Street, New York City

Designed to navigate enterprise and carrier network operators through all carrier hotels and colocation houses available in the US and globally.

Visit event website...