Ericsson hovers as NSN suffers revenue fall
Sales decline despite addition of Motorola products, but the Americas and services see growth
Published: 26 January, 2012
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Nokia Siemens reported a grim fourth quarter, and Ericsson was doing an impression of a vulture circling, as CFO Jan Frykhammar said the Swedish giant would consider acquiring NSN assets.
Frykhammar hastily added, in an interview with TotalTelecom, that those assets would have to be up for sale. "If they put out assets for sale and then come official processes, I think our responsibility is - if we are invited to have a look - to look at them," he said. NSN has sold off various non-core units recently, having undergone a major reorganization to focus sharply on mobile broadband. Ericsson's North American business grew significantly after it bought many assets from bankrupt Nortel, and this week it has been linked to carrier Wi-Fi company BelAir Networks.
For Q411, NSN saw its revenues fall by 4% year-on-year to €3.815bn ($5bn), despite the addition of the products and customers it acquired from Motorola Solutions last April. Without these, sales would have fallen by 11% instead, said the vendor. Just over half of the revenue came from the global services business, which NSN has spent the past two years building up. This helped boost gross margin from 26.4% to 29.2%, as did a shift to more software sales and the impact of the former Motorola assets. Operating profit was up from just €1m a year ago to €67m.
The brightest region for NSN was North America, where revenues were up 30% year-on-year to €293m, though the area is the vendor's smallest, accounting for well under 10% of its total. Latin America also grew by 9%, to €509m, but every other geography was down, Greater China most seriously, falling by 14% to €438m. The rest of Asia-Pacific dropped by 7%, as did the Middle East and Africa, while the largest market, NSN's European homeland, fell by 6% to €1.27bn.
For the full year, NSN's revenues were up 11% to €14.04bn ($18.5bn). Without the new Motorola properties, sales would have been up by 4% on 2010. Operating loss was €300m, less than half the 2010 figure of €686m.
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