Outgoing Ericsson CEO Carl-Henric Svanberg (he will step down in January to become the chairman of BP) says that while he's seeing some signs of life in many of the largest telecom markets, it will be quite a while before the company will be able to reap the rewards of that recovery.
"What we are seeing right now is the new projects that were planned nine months or a year ago when the financial crisis was much tougher," he said during the company's earnings call. "Now everyone understands we are moving to safer territory but it takes time for operators to plan."
As a result, the Swedish vendor reported that net profits declined 72 percent in the third quarter 2009 earnings. Upon hearing the news, financial markets punished Ericsson sending its shares down more than eight percent. Ericsson's results are in line with its nearest competitors. Nokia, for example, reported that its Nokia Siemens Networks (NSN) venture suffered a $1.64 billion operating loss.
Svanberg believes that countries like China, India, Japan, the U.S. and most of Western Europe show promise. However, Eastern Europe, Africa and Latin America, are lagging behind due to access to credit.
Not everything is doom and gloom for Ericsson. Similar to NSN, Ericsson is also seeing continued interest in its network services--a segment that accounts for 40 percent of the company's revenues. A major proof point for services came this past summer when Ericsson won a $5 billion outsourcing contract from Sprint/Nextel.
- Financial Times has this article
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