Broadband, services drive Ericsson sales

Broadband, services drive Ericsson sales

Services and data networks drove sales for Ericsson in 2005.

The rollout of high-speed mobile data networks as well as a demand for services drove sales up 15 percent in 2005 for Telefonaktiebolaget LM Ericsson, the company said Tuesday.

Sales reached 151.8 billion krona ($US19.1 billion as of Dec. 31, the last day of the period being reported) for the year, compared to 132 billion krona in 2004. Net income for the year was up 39 percent, reaching 24.3 billion krona.

Ericsson said that data networks and its services business were key areas of growth for the year. The company supplied 21 HSDPA (High-Speed Downlink Packet Access) networks in 17 countries in 2005. Also during the year, it supplied 35 new WCDMA (Wideband Code Division Multiple Access) networks. Of the total 91 WCDMA networks around the globe, Ericsson has built more than half, the company said.

Professional services sales at Ericsson grew 24 percent in 2005, compared to the previous year. Ericsson hired another 1,100 workers to staff the growing business.

"This was really a breakthrough year for services," said Carl-Henric Svanberg, president and chief executive officer of Ericsson, during a conference call to discuss the results. "We see great potential in managed services where we do take over and operate the networks for the operators." He said that operating expenses make up the biggest cost item for operators so especially in highly competitive markets, the operators are looking to outsource network operations as a way to cut costs.

Regional growth for Ericsson was in line with the rest of the mobile industry, which is earning less revenue in saturated regions like Western Europe and an increasing amount from developing areas like Latin America. Sales in Western Europe for Ericsson were up 5 percent for the year, but sales declined by 4 percent in the fourth quarter compared to the same quarter in 2004.

But sales for Ericsson in Latin America were up 32 percent and in Eastern Europe, Middle East and Africa sales grew 19 percent for the year. Asia Pacific sales grew 10 percent and North America sales were up 26 percent for Ericsson.

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