Ericsson CFO sees strong performance from radio business

Infrastructure vendor Ericsson has reported year on year flat sales for 2Q13, generating SEK55.3bn ($8.4bn). Operating income grew from SEK 2.1bn in 2Q12 to SEK 2.5bn, while operating margin grew from 3.8 per cent to 4.5 per cent.

Adjusting for the strong performance of the Swedish krona, the firm saw an underlying growth of seven per cent. In 1Q13, Ericsson reported a similar growth rate of six per cent.

According to CFO Jan Frykhammar, the vendor’s business mix has started shift to focus more on its radio connectivity offering. He also reported that Ericsson has started to benefit from initial upsell opportunities and LTE contracts for modernisation projects in Europe.

“On the more challenging side, we have the continued decline of the GSM business in China and also some continued decline of our circuit switch core business. We had somewhat of a challenge, comparatively, in the support solution area; mainly because we sold a lot of compression equipment for the Olympics event in the UK last year,” he said.

“Fundamentally, I think the radio business had a really strong quarter.”

While rivals such as NSN are opting to narrow down their focus, Ericsson’s offering remains largely comprehensive. Frykhammar insists Ericsson is also becoming a specialist, but in more areas.

“I think the big difference compared with some of the competitors is that they are more focused on the technology rather than services. We think that by adopting this strategy we are very relevant to our customers and we can handle a bigger scope in terms of complexity than many others.

“You will continue to see us invest in skill sets and solutions to support that ambition.”

He added that Ericsson is primarily looking to grow organically, but will consider relatively small-scale acquisitions if it finds any gaps in its offerings.