Ericsson Profits Plunge in 2016 but Higher Revenues Than Expected

Ericsson Profits Plunge in 2016 but Higher Revenues Than Expected Image Credit: Ericsson

Swedish telecoms vendor, Ericsson reported fourth quarter net loss of 1.6 billion kronor ($USD181 million), mainly due to a decline in broadband investments and licensing revenues. 

Ericsson's revenue was 65.2 billion kronor ($USD7.38 billion) in the three months to December, down 11 per cent from 73.6 billion kronor it recorded in the same quarter a year before. The revenues, however are higher than analysts predicted, giving some relief to newly appointed CEO Borje Ekholm. Despite strong sequential sales growth in networks, the underlying market remained weak in the fourth quarter, said the Company.

For the full year, Ericsson's sales decreased by 10% mainly due to weaker demand for mobile broadband, especially in markets with a weak macroeconomic environment. Operating income declined to 6.3 billion kronor ($USD21.8) due to lower sales and a changed business mix in mobile broadband, with a lower proportion of capacity upgrades. 

Börje Ekholm, President and CEO of Ericsson, "The negative industry trends remained in the fourth quarter. However, sales were positively impacted by favorable currency exchange rates combined with hardware deliveries, previously planned for Q1 2017. Profitability declined YoY following lower IPR licensing revenues mainly due to last year's agreement with Apple as well as increased restructuring charges. Operating cash flow in the fourth quarter was SEK 19.4 b., supported by reduced operating assets."

Ray is a news editor at The Fast Mode, bringing with him more than 10 years of experience in the wireless industry.

For tips and feedback, email Ray at ray.sharma(at)thefastmode.com, or reach him on LinkedIn @raysharma10, Facebook @1RaySharma

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