Ericsson boosted by patent deal; Vestberg quashes Microsoft rumour

Swedish equipment vendor Ericsson reported flat sales for the fourth quarter and full year 2013, while net earnings were boosted by the patent licensing agreement with Samsung reported last week.

The strength of the Swedish Kroner also had a significant impact as revenues came in at SEK227.4bn (£21.2bn) for the year and SEK67bn for the quarter, both flat year on year. The company turned a profit of SEK64.bn in the fourth quarter and SEK12.2bn for the year, up significantly due largely to the SEK3.3bn boost from licensing GSM, UMTS, and LTE patents to Samsung after two years of negotiations.

CFO Jan Frykhammar told Telecoms.com that the company was now seeing a higher share of capacity projects over coverage projects,as expected with an industry transitioning to LTE. While sales came under pressure as very mature markets such as the USA and Japan see reduced activity and the peak of large projects. However the company benefited from two lucrative contracts in China, where LTE network deployments are underway. And services put in a typically strong, although flat year on year, showing at 42 per cent of total sales in 2013.

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The company has fully integrated the modem business from dissolved joint venture ST-Ericsson, as well as built on its various acquisitions, including Airvana and Microsoft Mediaroom from last year and Telcordia from 2011.

Frykhammar said the company was going to increase its R&D expenditure for next year due to drivers in IT, which is related to the portfolio that will sell into SDN and Cloud projects as well as in IP and BSS.

“We have been investing to make all our applications cloud-enabled and also developing next generation OSS which is also a cloud system. So we are changing how we allocate R&D money to be part of that upside and many operators are looking at network architecture going forward. So we are investing money in making software and services cloud enabled.”

On the matter of chief executive Hans Vestberg, who has been linked by the industry rumour mill to the top job at Microsoft, Frykhammar sought to set the record straight.  He told Telecoms.com that Vestberg had met with the Ericsson board of directors Wednesday morning to quash the Microsoft rumours and reaffirm his commitment to the Swedish vendor. “It’s clear that [Hans] is Ericsson,” Frykhammar said.