Ericsson posted a solid quarter, although its results were impacted by the strength of Swedish currency and did not meet all of analysts’ expectations.
Sales were down 3% year-over-year overall, although Ericsson noted that for comparable units and when corrected for foreign exchange effects, sales were actually up 3% year-over-year.
Still, the company’s stock was trading down about 5.5% at midday, to just below $80 per share.
Ericsson’s networks segment saw year-over-year growth of 4%, which the company said was driven by mobile broadband business in Europe and Latin America. Ericsson said that its two large mobile broadband projects in North America peaked in the first half of 2013, leading to slightly lower sales in the third quarter, and the transition to 4G in China led to lower investments in GSM. There was also reduced activity in Japan. However, Ericsson said there was higher demand for HSPA products in seven out of its 10 regions.
Despite being a foreign vendor in China, the company did manage to get a slice of the recently announced $3.2 billion in contracts from China Mobile — although the lion’s share reportedly went to Chinese vendors Huawei and ZTE. China Unicom has yet to make vendor choices.
“The 4G/LTE tenders in China continue and so far two of the major operators have made their choices. Despite having insignificant market share for 3G, Ericsson has been named technology partner for both these operators and we will now build on this initial footprint,” said Ericsson CEO Hans Vestberg.
Johan Wibergh, head of Ericsson’s Networks business unit, confirmed that perspective.
“I do believe that we will have higher market share in 4G than we had in 3G, so from that viewpoint, you have to be happy,” said Wibergh. “It’s a good starting point. It’s a very competitive market in China, and we had low market share in 3G.”
Vestberg said that the “pace is picking up in the European market” with WCDMA/LTE investment, and that the company sees growth in several European markets.
Wibergh said that the most important transition that Europe needs to go through is the switch from voice-based networks to data-based.
Ericsson also announced its new Radio Dot small cell product in the past quarter, which the company has touted as “redefining” small cells. Verizon Wireless and AT&T have already expressed interest in the Radio Dot System, and Ericsson has said it will be trialing the technology with operators in advance of commercial availability in the second half of 2014.
“We are really excited about that product,” Wibergh said. “It has been a big challenge for the whole industry to find a solution that really can do indoor coverage in a cost-effective way.”
