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Earnings shock from Ericsson
Thursday, 18 July 2013
Despite the strong gross margin, telecom company Ericsson fails to reach up to expectations in terms of earning.
Ericsson's key gross margin increased slightly in the second quarter
to 32.4 percent, up from 32 percent in both the same period last year
and the first quarter. But the performance of the core business,
Networks was not even half as big as analysts collective had
anticipated. The operating profit stayed at Skr1.3 billion against 2.7
expected by the analysts community.
Consolidated earnings burdened also by non-recurring costs. Overall,
net profit of Skr1.5 billion is only half as large as the collective
analysts had expected.
Neither sales reached up to advance tips. Sales were unchanged,
Skr55.3 billion. According the analysts, low average forecast of
Skr56.4 billion was expected.
Organic growth, excluding currency effects, was 7 percent. Profit
dragged down by one-time items totalling Skr900 million, related to
losses on sales and withdrawal from the business for the telecom and
power cables. According to analysts it was anticipated a recurring
items on average of Skr680 million.
Service Operations Global Services operating profit exceeded
expectations while the third and smallest business area Support
Solutions made the loss instead of an expected profit.
On the positive side, however, the second quarter saw Ericsson's key
network unit post 8 percent sales growth adjusted for currencies,
extending a slow recovery that started at the end of 2012, but still
below expectations.
After a tough 2012, when Ericsson's networks unit saw sales drop 12
percent, operators have started to gradually increase investment in
high-speed mobile broadband networks in some
by Scancomark.com Team