STOCKHOLM, SWEDEN--(Marketwire - Nov 6, 2012) -
* Management outlines list of ongoing activities to improve profitability
* The fundamentals for longer-term positive development for the industry remain solid. Ericsson continues to invest in its main competitiveassets - technology leadership, services leadership and global scale in order to become a leading ICT solutions provider in telecoms
* Ericsson estimates the overall addressable equipment market will show aCAGR of 3-5% 2012-2015. Telecom services expected to show a CAGR of 5-7% and support solutions expected to show a CAGR of 9-11%
Today, Ericsson (
"This development will naturally imply a future business mix for Ericssonwithmore recurring software and services revenues. However, hardware willalways bepart of the mix and a key differentiator for Ericsson," says Hans Vestberg.
Ericsson is currently in a phase with a higher share of coverage thancapacityprojects due to a high proportion of hardware being rolled out. At theInvestorDay Management will reiterate that this mix is expected to prevailshort-term but that the negative impact from the network modernizationprojects in Europewill start to gradually decline end 2012. Hans Vestberg will point to thefactthat the company presently has a selective approach to market shareinvestmentsand a strong focus on commercial management. Management will also discusssomeuncertainties going forward such as macroeconomic factors, the competitivesituation and operator consolidation.
A market outlook for 2012-2015 will be presented. Ericsson estimates thatthetotal network equipment market will show a compound annual growth rate(CAGR) of3-5%. In Ericsson's key equipment market segments - radio, IP andtransport,core - the CAGR is expected to be 4-6%. In radio a CAGR of 2-4% isexpected, inIP and transport a CAGR of 6-8% and in core a CAGR of 0-2%. Ericssonexpects themarket for telecom services to show a CAGR of 5-7% in the same time period.Themarket for support solutions is forecasted to show a CAGR of 9-11%,including aCAGR of 12-14% for the media market. The market for OSS/BSS software andservices is expected to show a CAGR of 5-7%.
Ericsson has a leading market position in four out of its six businesses.Inmobile equipment, Ericsson increased its market share to 38% in 2011. Inthethree key equipment market segments, radio, IP and transport, core, thecompanyhas an aggregated market position of 27% which makes Ericsson the largestplayer. In the fragmented telecom services market Ericsson increased itsmarketshare 2011 from 11% to 12%. The company also has a leading market positioninOSS/BSS.
During the Investor Day, Hans Vestberg will elaborate on strategies todeliverprofitable growth. Areas with portfolio momentum expected to contribute totop-line growth are mobile broadband, managed services and OSS/BSS. He willalsodescribe how the company is expanding beyond its core business in order tocapture value from adjacent industries, while operators continue to be themajorcustomer segment.
Jan Frykhammar, CFO and Executive Vice President, will elaborate on howEricssonintends to improve capital efficiency. The working capital targets for thecompany will remain unchanged with DSO of less than 90 days, payable daysofmore than 60 days and Inventory turnover of less than 65 days.
Jan Frykhammar will reiterate that the company will continue to proactivelyidentify and execute on additional efficiency gains and cost reductions inorderto improve profitability. He will also outline a list of profit improvementareas to reach the compound operating income growth of 5-15% required intheExecutive Performance Stock Plan.
Johan Wibergh, head of business unit Networks and Executive Vice President,willpoint out key contributors for the segment to return to double digitoperatingmargin. He will mention a number of examples of these contributorsincludingEricsson's ability to gain a price premium through its technologyleadership,business mix improvements, scale and agile software development. RimaQureshi,head of business unit CDMA Mobile Systems, will elaborate on how allEricsson'sCDMA customers have successfully evolved into Ericsson's LTE solutions.Ericsson's acquisition of Nortel has been successful and focus for the CDMAoperation is now on maximizing business contribution as well as to excel inlifecycle and cost management.
Magnus Mandersson, head of business unit Global Services and Executive VicePresident, will describe the company's services journey to drive thetransformation to becoming a leading ICT solutions provider in telecom.Mandersson will outline the continued focus on industrialization ofservices,leveraging global scale and how the company drives services innovation forcontinued growth.
Per Borgklint, head of business unit Support Solutions, will discuss howthesegment Support Solutions showed a trend shift Q212 and Q312 when itreportedprofit. He will describe the strategy for Support Solutions with focus onOSS,BSS, Media and m-commerce. The presentation will also focus on thecharacteristics of the business where a subscription based model forrecurrentsoftware revenues is being introduced.
Ulf Ewaldsson, Chief Technology Officer, will discuss key technologies forevolving the networks, including heterogeneous networks, 4(th) generationIP,cloud and software defined networks as well as OSS/BSS and real-timeanalytics.
At the end of the day, Hans Vestberg will conclude that the fundamentalsforlonger-term positive development for the industry remain solid. He willstresshow increased smartphone penetration and consumers demand for having dataconnectivity around the clock is driving increased complexity in thenetworks.Until now, the major part of the investments in the telecom industry hasbeendirected to devices and applications. Going forward, Ericsson expects theindustry to re-balance investments towards optimizing network performance.
"Mobility is becoming even more relevant in the networked society, drivingthedemand for our offering," Hans Vestberg will conclude. "We have a clearlong-term objective to increase our value share from the networked societythroughbecoming a leading ICT solutions provider in telecom. In the short-term, weaimto improve value creation by focusing on profitable growth."
Ericsson discloses the information provided herein pursuant to theSecuritiesMarkets Act and/or the Financial Instruments Trading Act. The informationwassubmitted for publication on November 6, 2012 at 2012.
Ericsson's investor day 2012:http://hugin.info/1061/R/1655260/534849.pdf
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Source: Ericsson via Thomson Reuters ONE
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