Ericsson Not at "the Beginning of the End," CEO Insists

You can draw your own conclusions about Ericsson CEO Jan Frykhammar saying “this is absolutely not the beginning of the end for Ericsson.” Those remarks came in the context of a warning that “business result for the third quarter 2016 will be significantly lower than company expectations.”

In the first half of 2016, with demand for mobile broadband products has been negative. Sales declined by 14 percent year over year, while gross profit margin declined 34 percent.

Ericsson said “business result for the third quarter 2016 will be significantly lower than company expectations,” driven by macro-economic toughness in some markets, as well as completion of some mobile network upgrades in Europe.

Ericsson did not specifically mention competition from either Huawei or Nokia Networks, but many will say that also is part of the problem.

Metric
Q316
Q315
YoY change
Q216
QoQ change
Sales
51.1
59.2
-14%
54.1
-6%
Sales in Networks segment
23.3
28.8
-19%
26.8
-13%
Gross income
14.5
20.1
-28%
17.5
-17%
Gross margin
28.3%
33.9%
-
32.3%
-
Operating expenses
-14.1
-14.9
-6%
-14.5
-3%
Operating income
0.3
5.1
-93%
2.8
-88%
Income in Networks segment
-0.3
2.8
-109%
1.6
-116%
Operating income excluding restructuring charges
1.6
6.1
-73%
3.8
-58%

Over the past several decades, many former big brand names in telecommunications have disappeared, as the global industry has consolidated. One might point to Nortel and Lucent, for example, as the most-obvious examples.

Some seem to be thinking Ericsson could be next.
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