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Research Tree provides access to ongoing research coverage, media content and regulatory news on ERICSSON LM-B SHS. We currently have 6 research reports from 1 professional analysts.
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ERICSSON LM-B SHS
ERICSSON LM-B SHS
No fireman seems to be willing to extinguish the fire
21 Oct 16
Ericsson reported sales of SEK51.1bn, a decrease of 13.7% yoy, which was expected after the profit warning on 12 October. On a comparable basis (comparable units and currency), however, the decline was 7%. Every region but SE Asia displayed a decrease, the sharpest being once again in the Middle East (-25%). Networks fell by 19% yoy (SEK23.3bn), Global Services by 8.3% (SEK24.8bn) and Support Solutions by 10.9% (SEK2.9bn). The gross margin, excluding restructuring charges, decreased yoy by 490bp to 29.4%, due to an unfavourable mix. The operating margin was therefore negatively impacted yoy, losing 790bp at 0.7% (710bp excluding restructuring). The EPS came in at SEK-0.07, corresponding to a 106% decline yoy. As a consequence, the company announced an intensification of its restructuring effort in the short term as a way to offset the sales decline. However, the weak market conditions are expected to remain in the short term.
No growth and more cost-cutting, again
20 Jul 16
Ericsson reported sales of SEK54.1bn, a decrease of 10.8% yoy. On a comparable basis (comparable units and currency), however, the decline was 7%. The company performed well in South America and Oceania, while all other regions displayed a decrease, the sharpest being in the Middle East (-24%). Networks fell by 14.1% yoy (SEK26.8bn), Global Services by 7.2% (SEK24.5bn) and Support Solutions by 8.2% (SEK2.9bn). The gross margin, excluding restructuring charges, decreased yoy by 190bp to 33.2%, due to an unfavourable mix including stronger revenues from lower-margin mobile broadband products compared to software and services-related products. The operating margin was negatively impacted yoy, losing 80bp (340bp excluding restructuring) due to a less IP in the mix. The EPS came in at SEK0.48, corresponding to a 26% decline yoy. As a consequence, the company announced an intensification of its restructuring effort, as it will reduce investments in IP and bring down the annual run rate of opex at SEK53bn in H2 17 vs. SEK63bn in 2014. However, the weak market conditions are expected to remain in H2.
A difficult Q1, with no trigger to be expected in the mid-term
21 Apr 16
Ericsson reported sales of SEK52.2bn, a decrease of 2.4% yoy. On a comparable basis (comparable units and currency), however, the decline is limited to 1%. The company performed well in North America and in South-East Asia, while there was some weakness in most other regions, with a particular drop in India (-24%) and Europe (-17%). The gross margin, excluding restructuring charges, decreased yoy by 240bp to 33.9%, due to an unfavourable mix including stronger hardware sales compared to software and services-related products. The operating margin was favourably impacted by improvements in Networks, reaching 7.9% excluding restructuring charges, up 280bp yoy (6.6% and up 270bp including these charges). However, due to the challenging market conditions and strong headwinds on the top-line perspectives, the company decided a reorgansiation of the business, which will be effective by July 2016, as well as an acceleration of its restructuring programme, which will lead to annual charges of SEK4-5bn vs. SEK3-4bn previously expected.
Relying on cost-cutting to preserve profits in the face of no growth
28 Jan 16
Ericsson reported sales of SEK73.6bn, an increase of 8% yoy. On a comparable basis (comparable units and currency), however, sales were down by 1%. The company performed well in emerging markets such as India, Indonesia and Mexico, while there was some weakness in Russia and Brazil, as in the previous quarter, as well as in the Middle-East. North America and China recovered after a difficult Q3. Despite an IPR agreement with Apple, the gross margin excluding restructuring charges decreased yoy by 100bp at 36.6%, due to an unfavorable mix including stronger hardware sales. The operating margin was favorably impacted by the global cost and efficiency program, which is progressing according to plan (annual net savings of SEK9bn during 2017 relative to 2014). As a consequence, and also due to the lower impact of currency hedge contracts and positive currency effects, the operating margin including restructuring charges came in at 15%, an increase of 570bp yoy, while the increase was 550bp without these charges (16% vs. 10.5%).
A disappointing top-line, offset by the cost-cutting program
23 Oct 15
Ericsson reported sales of SEK59.2bn, an increase of 3% yoy. On a comparable basis (comparable units and currency), however, sales were down by 9% yoy at SEK59.2bn for the third quarter in a row. The areas of weakness were Japan, Russia and Brazil, while on the other hand strong growth was reported in India, South East Asia and Oceania. From a divisional perspective, this dip in revenues was caused by lower sales in Networks, partly offset by sales growth in Professional Services. The gross margin excluding restructuring charges reached 34.5%, a 100bp decrease yoy, caused by an unfavorable mix, namely a bigger share of the Global Services business. The operating margin was favorably impacted by the global cost and efficiency program, which is progressing according to plan. This program is targeting annual net savings of SEK9bn during 2017 relative to 2014, and these savings should represent c.SEK5bn in 2015. As a consequence, and also due to the lower impact of currency hedge contracts, the operating margin including restructuring charges came in at 8.6%, an increase of 190bp yoy, while the increase was 300bp without these charges (10.2% vs. 7.2%).
A good operating performance in Q2 despite still disappointing revenues
17 Jul 15
Q2 reported sales increased by 11% to SEK60.7bn. But sales, adjusted for comparable units and currency, decreased by 6% yoy, exactly as in...Q1 ! This poor performance is once again due to the US market still slowing as operators remain focused on cash flow optimisation in order to finance major acquisitions and spectrum auctions. But we note, however, the mobile broadband business in North America stabilised in the quarter even if it remained at a lower level than a year ago. The revenue decline in North America (around -25% at constant change but offset by FX considering the reported figures) was partly compensated by the continued fast pace of 4G deployments in China. Sales growth was strong in the Middle East, India and South East Asia, while it continued to be weak in Japan. Excluding restructuring charges, the gross margin declined to 35.1% (vs 36.6% a year ago and 35.4% in Q1) but this is quite a good margin given the lower capacity business in North America and continued 4G coverage deployments in Mainland China (mobile broadband capacity projects have better margins than the network roll-out). Operating income, excluding restructuring charges, improved to SEK6.3bn with an operating margin of 10.4% (vs 7.7% a year ago and 5.1% in Q1). The improvement was driven by higher sales and positive currency hedge effects, partly offset by the lower gross margin. But we note that after a weak Q1, the Networks segment's profitability recovered (to 13.5% excluding restructuring charges vs 3% in Q1). So quite disappointing revenues, as in Q1, but a good operating performance.
30 Nov 16
Abzena (ABZA): Interim results indicate happy customers (BUY) | Horizonte Minerals* (HZM): Fund raise completed (CORP) | SacOil* (SAC): Half-year trading statement (CORP) | Revolution Bars (RBG): New openings (BUY) | Amino Technologies* (AMO): Multi operator FUSION roll out (CORP)
Joy of Techs
21 Nov 16
ICT evolution is driven by technological development as advances are made which both meet and shape customer requirements. Our 2011 note No such thing as a telco described the modern reality in that former ‘telcos’ now deliver varying elements of a range of managed services. We built on this theme last year, exploring in further detail their evolutionary paths, operating fundamentals, and cashflow yield similarities. In the consumer environment, demand for bundles of technology is complemented by demand for content. Across the pond, the mooted combination of AT&T and Time Warner typifies the bundled need of ‘pipe’ and content, since unbundled alternatives such as FaceTime and WhatsApp can be easier and clearer to chat over, and Amazon and Netflix are easier to watch anywhere. In the UK, BT’s defensive actions cover delivery, content and capabilities, acquiring EE yet also buying football rights. While TV was long ago added to triple play to become quad play, voice is now merely an app, and fixed and mobile seen as just dumb pipes: it's the content that will influence consumer choices. Growth of TV and film as well as music and gaming over IP leads to UK small cap opportunities. In context of the drive to maximise value from pipes and access by offering content and data, we look at some amongst the potential tech small cap beneficiaries: Amino*, Keyword Studios, ZOO Digital*, 7digital*, KCOM* and CityFibre*.
N+1 Singer - Morning Song 03-11-2016
03 Nov 16
Overall trading for the year appears to have started slightly slowly overall but with underlying revenues making progress and profits flat for the period. Slow profit progress was already expected due to the previously signalled growth orientated investment being made. A material timing change on a Compliance unit contract, strong growth in AXCO and buoyant Health performance bode well for revenue performance looking forward. Visibility levels are said to be good underpinning managements confidence that the group is on track for the year. Wilmington remains a good play on the growth in global regulation and compliance. BUY
Strategic focus at interims
30 Nov 16
KCOM’s interims show a focus on the continuing transformation of the business in cost and investment, under a single brand. The benefit of the cash injection from the network sale has led to the opportunity for significant investment both in the Hull & East Yorkshire division and the nationwide Enterprise division, to create a platform for growth. With a reiterated commitment to a minimum 6p dividend for FY17 and FY18, ongoing cost-saving initiatives, and proof of customer enthusiasm for the integrated platform which investment will further support, KCOM continues to deliver an attractive dividend in anticipation of its return to headline growth. Target 130p reiterated.