Post-modem Ericsson wobbles thanks to flat sales and falling profits
Trouble at t'mill as scandal-hit board member steps down
Ericsson's flat sales last year were the result of its disappointing fourth quarter, especially in America, its latest financial results show.
The Swedish company is still the biggest supplier of mobile network infrastructure in the world, and in the fourth quarter it saw strong sales growth in the Middle East, Asia and Europe.
Significant growth against local manufacturers in China is a real achievement and this has come about on the back of 4G mobile broadband usage. Similarly its disappointing that the US, which is adopting 4G very much faster than Europe, has seen a sales decline of eight per cent.
There are costs in the annual figures associated with Ericsson pulling out of the modem business, which are distorted by some currency hedging decisions. Margins are down from 9.3 per cent to 7.4 per cent but 2013 had some exceptional intellectual property payments from Samsung.
Ericsson is still haggling with Apple over intellectual property rights, which is going to make lots of lawyers even richer.
For the whole of financial year 2014, net sales remained flat at SEK228bn (£18.3bn), with profits down slightly from 2013's SEK12.2 bn (£977m) to SEK11.1 bn (£889m) today, a drop of nine per cent.
The company, which was once known for handsets, has moved to infrastructure – and is now moving to what it calls the “networked society”, promoting the Internet of Things. The on-going restructure will no doubt see more job losses.
One name on the list of board directors which will not be on the next set of figures is deputy chairman Sverker Martin-Löf, who was on the Ericsson board as chairman of Industrivärden, which has a major shareholding in Ericsson. A scandal over family use of Industrivärden's private jets has unseated Martin-Löf; the new chairman of Industrivärden is Anders Nyrén, reports the FT. Nyrén will also join the Ericsson board. ®