) reported Non-IFRS earnings (excluding losses due to divestments
and exiting the telecom and power cable operations) of SEK 1.31
(20 cents) in the third quarter of 2013 compared to the Zacks
Consensus Estimate of 18 cents. Earnings grew 26% year over year
driven by lower operating costs and higher gross margins.
Revenues in the quarter declined 3% year on year and 4%
sequentially to SEK 53.0 billion ($8.1 billion). Revenues were
primarily impacted by currency fluctuations and weak sales in
North East Asia as well as India.
contracted 1% year over year and declined 5% sequentially. During
the quarter, the segment was impacted by lower sales in North
America. In North East Asia, GSM (Global System for
Communication) investments continued to decline in China and
Japan continued to be negatively impacted by currency as well as
due to reduced activity since the company has almost completed a
sales declined 1% year over year and 4% sequentially. The decline
in revenues was primarily due to the foreign currency
translation. After adjusting foreign exchange impacts, revenues
grew 3% year over year driven by increased activity in North
America. Demand for professional services is on the rise with
operators increasing their operational efficiency and reducing
operating expenses through transformation activities in the
voice, IP and OSS/BSS domains.
sales for the quarter contracted 29% year over year, but grew 1%
sequentially. The year-over-year decline in sales was primarily
attributable to divestments as well as portfolio changes and
lower sales of compression technology. However, OSS sales
continued to grow both on year-over-year and sequential
Margins and Balance Sheet
Gross margin increased 160 basis points (bps) to 32.0%
supported by lower share of network modernization projects in
Europe and somewhat improved business mix. However, on a
sequential basis, gross margin declined from 32.4% to 32.0%.
The operating margin for the quarter was 8.1% versus 6.7% in
the prior-year quarter and 4.5% in the previous quarter. The
year-on-year decline was due to unfavourable impact of currency
Cash, cash equivalents and short-term investments amounted to
SEK 60.7 billion ($9.3 billion). The net cash position during the
quarter decreased to SEK 24.7 billion ($3.8 billion) primarily
due to increased working capital and acquisitions.
Ericsson currently has a Zacks Rank #2 (Buy). Also, some other
stocks such as
Novatel Wireless Inc
) carry the same rank.
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