Ericsson reports Q4 loss on ST-Ericsson charge

Ericsson reports Q4 loss on ST-Ericsson charge

31 JAN 2013

Ericsson reported a loss for the fourth quarter of 2012, resulting from its anticipated SEK8 billion charge related to its ST-Ericsson silicon joint venture. But the results were well received, due to the fact that there are positive signs for its core operations as 2013 progresess.

Hans Vestberg, president and CEO, noted in a statement that across the last year the infrastructure giant’s performance had been mixed, with its Networks unit in particular having a “challenging” twelve months.

“During the year profitability was negatively impacted by operating losses in ST-Ericsson, the ongoing network modernisation projects in Europe as well as the underlying business mix, with a higher share of coverage projects than capacity projects,” he said.

But there was some optimism looking forward, with the company noting in a statement: “The underlying business mix, with higher share of coverage projects than capacity projects, is expected to shift towards more capacity projects in the second half of 2013. The negative impact from the network modernisation projects in Europe will continue to gradually decline during 2013.”

Ericsson reported a fourth quarter net loss of SEK6.3 billion ($990 million), compared with a profit of SEK1.5 billion in Q4 2011, on revenue of SEK66.9 billion, up 5 percent from SEK63.7 billion.

For the full year, it saw a profit of SEK5.9 billion, compared with a prior-year profit of SEK12.6 billion, on sales of SEK227.8 billion, compared with SEK226.9 billion.

In Q4, sales in its networks business were SEK35.3 billion, up 6 percent year-on-year, with this growth “mainly driven by North America”.

CDMA sales were down 18 percent year-on-year (although up over the previous quarter due to “temporary capacity needs”), with the company noting that this business is “expected to continue to decline as North American operators continue their transition to LTE”.

Global Services sales increased by 4 percent year-on-year to SEK28 billion, to represent 42 percent of group sales in the quarter.

Ericsson made no further comment on the future of ST-Ericsson, following the decision of partner STMicroelectronics to exit the venture. It reiterated that it will “explore various strategic options for ST-Ericsson assets”.

Separately, ST-Ericsson reported a Q4 net loss of $169 million, compared with a loss of $241 million in the fourth quarter of 2011, on sales of $358 million, down from $409 million.

Didier Lamouche, its president and CEO, said: “We have continued to execute steadily and aggressively on our strategy and delivered on our commitments to improve our financial results, further reducing our losses and controlling expenses. However, we recognise that the level of losses and use of cash remains very high”.

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