CEO Comments
"Group sales in the quarter increased by 17% year-over-year driven by a continued strong demand for mobile broadband as well as increased services revenues," says Hans Vestberg, President and CEO of Ericsson. "Sales for comparable units, adjusted for currency and hedging, increased 24% year-over-year. Our performance year-to-date reaffirms our indications of a strengthened global market share. A higher proportion of coverage projects along with accelerating network modernization projects in Europe impacted gross margin negatively. Operating income, excluding joint ventures, was SEK 6.3 (6.2) b. in the quarter and net income amounted to SEK 3.8 (3.6) b., an increase of 6%.

Segment Networks sales grew 25% year-over-year. The sequential decrease of -3% is due to seasonality and reduced CDMA sales in North America. All regions except North America, Northern Europe & Central Asia, Mediterranean and India showed sequential growth in Networks. In the quarter, all remaining effects from the earthquake and tsunami in Japan in March this year on our supply chain have been eliminated and lead times are back to normal. With economic uncertainties in parts of the world, we cannot exclude somewhat more cautious short-term operator spending.

Segment Global Services sales grew 7% year-over-year and sequentially and Professional Services, currency adjusted, grew by 13% year-over-year. Managed services showed good development with increased sales of 12% sequentially, following 24 new managed services contracts reported in the second quarter. Segment Multimedia sales grew 11% year-over-year and 8% sequentially, with good traction also this quarter for revenue management in Middle East and Sub-Saharan Africa.

The quarter was mixed for our joint ventures. Sony Ericsson reported increased sales and improved average selling price. Our share of Sony Ericsson’s profit was SEK 0.1 (0.3) b. ST-Ericsson’s sales increased sequentially by 7% and revenues from new products continued to grow offsetting continuous decline in legacy products. Our share of ST-Ericsson’s loss was SEK -0.7 (-0.4) b.

Increased global smart phone penetration, new devices and the introduction of tiered pricing is driving continued mobile data traffic growth. Mobile broadband subscriptions are expected to reach close to one billion by year-end and to reach close to five billion by 2016. We believe that the fundamentals for longer-term positive development for the industry remain solid. Ericsson is well positioned to drive and benefit from this development,” concludes Vestberg.