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Ericsson Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: ERIC

The customer dialogue has been very much around network performance and quality of the networks as that is becoming key differentiator. Spectrum, with the expected data growth, of course, spectrum will be important point to have both more of, but also doing it more efficiently in the radio technology. And then very high on the list is monetizing the mobile broadband with tiered pricing and quality of service, driving a lot of changes in the OSS and BSS. And finally, we have added for quite a while, that's, of course, efficiency, discussion and focus more our customers very much when it comes to both network sharing, outsourcing and other types of efficiency gains by using our service or product portfolio.

Looking at the quarter, I will be brief here. Growth of 1% year-over-year, down 6% year-over-year for comparable units and adjusted for foreign exchange, that's basically the same as we had in the first quarter. We had a sequential growth of 9%, and the normal seasonality, which is normal seasonality is around 5. We will come back, but both Global Services and Support Solution had a strong quarter and are now contributing to around 50% of the turnover in the quarter of Ericsson. In Networks, Johan will come back, but here, we have the expected impact of the equipment sales of CDMA that is declining and then we had the weaker sales in the quarter in China and Russia.

If you then look at the profitability, the core Ericsson had a profit of SEK 3.3 billion, net income SEK 1.2 billion, clearly down from last year driven by Networks, with the profitability of Networks, but also that we have a wider loss in ST-Ericsson year-over-year, not sequentially but year-over-year, leading to earnings per share of SEK 0.78 in the quarter compared to SEK 1.60 last year. And of course, here, we need to remind you that Q1 included a onetime effect of the gain from the divestment of Sony Ericsson by SEK 7.7 billion.

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