Ericsson Profit Rises on Dollar, Apple Pact--second Update
January 27 2016 - 10:01AM
Dow Jones News
By Jens Hansegard
STOCKHOLM--Swedish telecoms equipment supplier Ericsson AB
posted a strong jump in net profit in its most recent quarter
thanks to higher licensing revenue, saying its broad alliance with
Cisco Systems Inc. should start to bear fruit this year.
Net profit rose 67% to 7.06 billion Swedish kronor ($825.3
million) in the three months to Dec. 31, helped by a new global
license deal with Apple Inc., Ericsson said on Wednesday. The
company had net profit of 4.22 billion kronor in the fourth quarter
of 2014.
Fourth-quarter revenue increased to 73.6 billion kronor from
68.0 billion kronor in the same period a year earlier. Stripping
out disposals, acquisitions and currency fluctuations, however,
revenue fell 1%.
Ericsson Chief Executive Hans Vestberg, who had struck an
enthusiastic note upon announcing the partnership with Cisco in
November, suggesting the two companies could start cooperating
immediately, said more work was needed to align product ranges and
marketing strategies.
"We've had no hiccups so far, but of course there is a lot of
integration work to be done as we assemble our joint portfolios and
offering to customers," Mr. Vestberg said in an interview.
Under last year's pact, Ericsson, a leader in wireless
equipment, has agreed to put its global sales force at the disposal
of Cisco, which dominates the market for Internet gear such as
routers and switches, but has a much smaller retail footprint.
Ericsson said the alliance would help improve operating income
this year and would generate $1 billion or more in additional sales
by 2018.
The joining companies, however, have yet to announce their first
joint contract.
Ericsson has a lot riding on the alliance because the Swedish
company was struggling to cope with the fast pace of changes in the
networks operated by mobile and wireline carriers, and fend off
fierce competition from rivals such as Huawei Technologies Inc. and
Nokia Corp.
Huawei is ramping up its activities in Europe, and is making
inroads into Ericsson's home turf, the Nordics, most recently by
joining with TDC Group, Denmark's largest telecom operator.
Meantime, Nokia has gained weight through the acquisition of
Alcatel-Lucent .
Ericsson and Apple reached a global license agreement in
December, ending an almost-year long patent dispute between the
companies.
Ericsson doesn't disclose details of its contract with Apple but
some analysts have estimated the deal added close to 3 billion
kronor to the Swedish company's operating profit in the fourth
quarter.
The company said it would propose paying a full-year dividend of
3.70 kronor a share against its 2015 earnings, up from 3.40 kronor
a year earlier.
Write to Jens Hansegard at jens.hansegard@wsj.com
(END) Dow Jones Newswires
January 27, 2016 09:46 ET (14:46 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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