Ericsson reported weak third quarter results, due to reduced
business activity in the North American region owing to lower
operator investments. Also, higher operating expenses and adverse
impact from hedge contracts continued to act as headwinds.
Moreover, political unrest in the Middle East and Northern African
countries remains a concern. Nevertheless, the company is
benefiting from the rising demand of 4G/ LTE technologies in
growing regions like China, India and the Middle-East. The recent
deal with Reliance for spreading network in India is noteworthy in
this respect. In addition, the company has been focusing on
increasing its presence in the TV and media segment, where it has
completed a few strategic acquisitions. Also, popularity of the
company among local operators for enhancing their network coverage
in various parts of the world bodes well. Hence, we retain our
Neutral recommendation on the stock.
Founded in 1876 and headquartered in Stockholm, Sweden, Ericsson
is a leading provider of communication networks, telecom services
and support solutions. The company is a leader in
telecommunications and is now expanding its role into an ICT
(Information and Communications Technology) solutions provider.
Ericsson has three operating segments:
Networks: The Networks segment delivers products and solutions
for mobile access, Internet protocol (IP), and transport and core
networks. Its products include radio access solutions IP and
transport solutions transmission/backhaul solutions, which include
microwave (MINI-LINK) and optical transmission solutions switching
and IP multimedia subsystem solutions and operations support
systems. The products also support operator's management of
Global Services: The Global Services segment delivers managed
services, including solutions for designing, building, operating
and managing networks or solutions maintenance and network sharing
solutions shared solutions and broadcasted and managed services.
This segment also offers product-related services comprising
services to expand, upgrade, restructure or migrate networks
network-rollout services and customer support and network
optimization services. Additionally, the segment provides
consulting and systems integration services that include technology
and operational consulting, integration of multi-vendor equipment,
design and integration, and transforming programs and industry
Support Solutions: The Support Solutions segment offers
operations and business support systems, enabling networks and
services management, and customer interaction and revenue
management and television (TV) and media management services that
enable operators, broadcasters and content owners to create
multiscreen TV and M-commerce software solutions and hosted
Ericsson (ERIC): Read the Full Research Report
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