Ericsson stuns markets and claims immunity from recession (so far)
Published: 21 October, 2008
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While the handset makers have been eagerly spinning their third quarter results to show their most positive light, Ericsson didn't have to try to impress - its results outdid market expectations decisively, giving a much needed boost of confidence to the market, despite the infrastructure market leader's warnings of a "flattish" business next year.
Ericsson stock soared by more than 20% as the company's CEO Carl Henric Svanberg offered a masterclass in how to steer a giant ship through stormy waters, and even claimed not to have been affected by the global financial crisis (as yet, anyway). In an uncharacteristically showy gesture, the Swedish firm released its results four days early because they were so good - a happy contrast with last year's Q3, which was announced early because the figures were bad.
Of course, the poor results of a year ago helped the growth percentages look particularly strong this time around, but even without that factor, Ericsson is looking good. "Our business in the quarter has not been impacted by the financial turmoil," said Svanberg in a statement. "Our customers are generally financially strong. In addition, networks are loaded and traffic shows strong increase."
Ericsson's revenues were up 13% to SEK49.2bn ($6.6bn), compared with SEK43.5bn ($5.8bn) in the same quarter last year. Third quarter revenues were up just 1%, though, from the previous quarter's revenues of SEK48.5bn. And net income plunged 28% year-on-year to SEK2.8bn ($378m), including restructuring charges, but this was far better than analysts had expected.
Svanberg urged caution for those making forecasts for the fourth quarter and next year. Ericsson itself does not issue guidance, but the company said it is planning for a "flattish" market in mobile infrastructure balanced by "good growth" in professional services next year.
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