-
Continued focus on accelerating strategy
execution and improved performance
-
Ericsson total addressable market expected to
grow by 1 to 3 percent in 2016-2018, despite expected decline in
mobile infrastructure market by 2 to 6 percent in 2017
-
Update on progress of implementation and
execution of new company structure, including high level 2015
financials per new reporting segment
Ericsson (NASDAQ: ERIC) is today holding its
annual Investor Update event in New York. The company is reporting
on its strategy implementation for faster business execution based
on its new company structure with three segments: Networks, IT
& Cloud, and Media. The new structure was implemented on July
1, 2016.
Ericsson's strategy builds on efficiency and scale
in its core business and investments in the new revenue base from
its targeted growth areas. This will enable the company to secure
leadership in an emerging broader 5G market - from technology to
new business models and services - enabling Ericsson to be a strong
business partner to existing and new customers.
Jan Frykhammar, President and CEO, Ericsson says:
"We are forcefully executing our strategy to drive incremental
profit improvements through greater efficiency, monetizing our
installed base in Networks and building new revenue base in IT
& Cloud and Media. Current focus is on speed, efficiency and
fine tuning of strategy execution."
Market size and outlook
Based on the new segment structure with products
and services combined, the company has estimated its addressable
market sizes and growth rates as follows:
-
Networks: addressable market of USD100 billion
in 2016, with -2 to 0% CAGR growth 2016-2018
-
IT & Cloud: addressable market of USD100
billion in 2016, with 5 to 7% CAGR growth 2016-2018
-
Media: addressable market of USD12 billion in
2016, with 9 to 11% CAGR growth 2016-2018
The company's total addressable market is expected
to grow by 1 to 3 percent in 2016-2018.
The negative industry trends from the first half
of 2016, due to weaker demand for mobile broadband, are expected to
prevail short-term. Therefore, the company is adapting operations
to lower business volumes to secure resilience and competitiveness.
Ericsson expects that the market for mobile infrastructure will
decline 10 to 15 percent during 2016 and a further decline of 2 to
6 percent in 2017.
New financial reporting
structure
As announced earlier, Ericsson will introduce a
new financial reporting structure as of Q1 2017, based on the new
company structure. Results will be reported in three segments:
Networks, IT & Cloud, and Media. Each segment includes the
combined sales from products and services.
The restated numbers for 2015 and 2016 will be
disclosed ahead of the Q1 2017 report. In the meantime, the company
provides the following high level, unaudited numbers for the new
segments based on full year 2015:
-
Networks: 75% of total net sales with mid-teens
operating margin, excluding restructuring charges
-
IT & Cloud: 20% of total net sales with
break-even operating margin, excluding restructuring
charges
-
Media: 5% of total net sales with negative
low-teens operating margin, excluding restructuring charges
Details of the event
President and CEO Jan Frykhammar and deputy CFO
Carl Mellander will be joined by members of the company's executive
leadership team.
Ericsson's Investor Update event in New York can
be accessed via the Ericsson website. Presentation materials can
also be downloaded from the website once the webcast has
started.
NOTES TO EDITORS
New company structure announcement - April 21,
2016
For media kits, backgrounders and high-resolution
photos, please visit www.ericsson.com/press
Ericsson is the driving force
behind the Networked Society - a world leader in communications
technology and services. Our long-term relationships with every
major telecom operator in the world allow people, business and
society to fulfill their potential and create a more sustainable
future.
Our services, software and
infrastructure - especially in mobility, broadband and the
cloud - are enabling the telecom industry and
other sectors to do better business, increase efficiency, improve
the user experience and capture new opportunities.
With approximately 115,000
professionals and customers in 180 countries, we combine global scale with technology and services
leadership. We support networks that connect more than 2.5 billion
subscribers. Forty percent of the world's mobile traffic is carried
over Ericsson networks. And our investments in research and
development ensure that our solutions - and our customers - stay in
front.
Founded in 1876, Ericsson has its
headquarters in Stockholm, Sweden. Net sales in 2015 were SEK 246.9 billion (USD 29.4 billion). Ericsson is
listed on NASDAQ OMX stock exchange in Stockholm and the NASDAQ in
New York.
www.ericsson.com
www.ericsson.com/news
www.twitter.com/ericssonpress
www.facebook.com/ericsson
www.youtube.com/ericsson
FOR FURTHER INFORMATION, PLEASE
CONTACT
Peter Nyquist, Head of Investor
Relations
Phone: +46 10 714 64 49
E-mail: peter.nyquist@ericsson.com
Ericsson Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
Ericsson Investor Relations
Phone: +46 10 719 00 00
E-mail: investor.relations@ericsson.com
Ericsson Forward-Looking
Statement
All statements made or incorporated by reference
in this release, other than statements or characterizations of
historical facts, are forward-looking statements. These
forward-looking statements are based on our current expectations,
estimates and projections about our industry, management's beliefs
and certain assumptions made by us. Forward-looking statements can
often be identified by words such as "anticipates", "expects",
"intends", "plans", "predicts", "believes", "seeks", "estimates",
"may", "will", "should", "would", "potential", "continue", and
variations or negatives of these words, and include, among others,
statements regarding: (i) strategies, outlook and growth prospects;
(ii) positioning to deliver future plans and to realize potential
for future growth; (iii) liquidity and capital resources and
expenditure, and our credit ratings; (iv) growth in demand for our
products and services; (v) our joint venture activities; (vi)
economic outlook and industry trends; (vii) developments of our
markets; (viii) the impact of regulatory initiatives; (ix) research
and development expenditures; (x) the strength of our competitors;
(xi) future cost savings; (xii) plans to launch new products and
services; (xiii) assessments of risks; (xiv) integration of
acquired businesses; (xv) compliance with rules and regulations and
(xvi) infringements of intellectual property rights of others. In
addition, any statements that refer to expectations, projections or
other characterizations of future events or circumstances,
including any underlying assumptions, are forward looking
statements. These forward-looking statements speak only as of the
date hereof and are based upon the information available to us at
this time. Such information is subject to change, and we will not
necessarily inform you of such changes. These statements are not
guarantees of future performance and are subject to risks,
uncertainties and assumptions that are difficult to predict.
Therefore, our actual results could differ materially and adversely
from those expressed in any forward-looking statements as a result
of various factors. Important factors that may cause such a
difference for Ericsson include, but are not limited to: (i)
material adverse changes in the markets in which we operate or in
global economic conditions; (ii) increased product and price
competition; (iii) reductions in capital expenditure by network
operators; (iv) the cost of technological innovation and increased
expenditure to improve quality of service; (v) significant changes
in market share for our principal products and services; (vi)
foreign exchange rate or interest rate fluctuations; and (vii) the
successful implementation of our business and operational
initiatives.
Ericsson Investor Update Nov 10
2016
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Ericsson via Globenewswire
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