reported a Non-IFRS net income (excluding amortizations,
write-downs of acquired intangible assets, and restructuring
costs) of 15 cents or SEK 0.99 per share in the first quarter of
2013, beating the Zacks Consensus Estimate of 9 cents. The
Non-IFRS earnings for the earlier year quarter were SEK 3.14 per
share or 49 cents, inclusive of a gain from the divestment of
Sony Ericsson aggregating SEK 7.7 billion.
Revenues in the quarter were SEK 52 billion ($8.08 billion),
up 7% year over year but decreased 19% sequentially for
comparable units and adjusted for foreign exchange impacts. The
Zacks Consensus Estimate for revenue was $7.8 billion for the
quarter. Consolidated revenues during the quarter were primarily
driven by higher revenues across Networks and rollout services,
especially from high value project activities centered in Europe
and North America. Geographically, North American segment
reported a 23% growth, while North East Asia experienced a tough
quarter with reduced sales in South Korea and adverse foreign
exchange effects in Japan.
surged 3% year over year and decreased 20% sequentially. The
year-over-year sales growth was driven by strong activity in the
U.S. and Indonesia due to continued investments in mobile
broadband and demand for services. The sequential decrease was
attributable to unrelenting decline in sales of GSM services in
China and Japan, resulting from an adverse foreign exchange
sales increased 4% year over year but were down 24% sequentially.
The year-over-year increase was driven by Network Rollout and 21
new Managed Services contracts signed by the company during the
quarter. The quarterly decrease in sales on a sequential basis
was driven by lower business activities in North East Asia and
delayed LTE deployments in Latin America.
sales for the quarter reduced 19% year over year and 33%
sequentially. The Multimedia brokering (IPX) business was
divested during the third quarter of 2012, which impacted sales
negatively both annually and sequentially. However, the segment
benefited from the strong demand for OSS/BSS, driven by operators
focusing to improve efficiency and adapting themselves to mobile
broadband business requirements.
Gross margin in the quarter was 32.0% versus 33.3% in the
prior-year quarter and 31.1% in the previous quarter. The
year-over-year decrease was driven by a reduced Network Rollout
margin and the additional burden of restructuring charges, while
the sequential improvement was based on effects of network
modernization projects in Europe. This improvement also offset
the year-over-year decline partially. Operating margin for the
quarter was 4% versus 17.8% in the prior year quarter. The
decrease was mainly attributable to restructuring charges and
reduction of operation in Sweden compared with gains in the prior
year from the divestment of Sony Ericsson.
Total operating expenses increased year over year by 2% to SEK
14.5 billion ($2.25 billion) due to higher restructuring charges.
Excluding acquisitions and restructuring charges, total operating
expenses were down 6% year over year. R&D expenses amounted
to SEK 7.9 billion ($1.2 billion). Selling and general
administrative expenses (SG&A) increased Y/Y to SEK 6.6
billion ($1.02 billion) due to acquisitions.
There was a negative cash flow of SEK -3.00 billion ($0.47
billion) from operations, primarily resulting from increased
working capital requirements for restructuring. Cash outlays for
restructuring amounted to SEK 0.3 billion ($ 0.04 billion).Trade
payables increased by SEK 3 million totaling to SEK 23 million as
Ericsson currently has a Zacks Rank #3 (Hold) and we prefer to
wait for signs of improvement in the performance of Ericsson.
Other stock form the same industry worth a look is Qualcomm Inc.
), Motorola Solutions, Inc. (
) and Sonus Networks, Inc. (
) all having a Zacks Rank #2 (Buy).
ERICSSON LM ADR (ERIC): Free Stock Analysis
MOTOROLA SOLUTN (MSI): Free Stock Analysis
QUALCOMM INC (QCOM): Free Stock Analysis
SONUS NETWORKS (SONS): Free Stock Analysis
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