Ericsson is sticking to its forecast that the GSM/WCDMA market will show mid-single-digit growth, and the market for professional services will show good growth as it starts the year outperforming it newly merged competitors.
As rivals Alcatel-Lucent and Nokia Siemens struggle to achieve the synergies from their recent mergers, Ericsson has made a sparkling start to the year with first-quarter income up 27% at SEK 5.8bn ($869.2m) on revenue that rose 6.5% to SEK 42.2bn ($6.2bn).
Ericsson CEO Carl-Henric Svanberg said the company had achieved market share gains in a stable growth environment. He said the company’s ability to manage large turnkey projects around the world also gave it a competitive advantage, and operating expenses grew less than 3% compared with sales growth of 8%.
With the completion of the acquisitions of Redback and Entrisphere and the bid to acquire Tandberg Television, he said it had strengthened its position in fiber-to-the-home and IPTV, and said the prerequisites for leadership in next-generation IP networks are now in place.
Ericsson’s networks revenue showed a 5% increase to SEK 29.3bn ($4.3bn), but the area where the company outdistanced its competitors was professional services where sales grew 15% to SEK 9.5bn ($1,38bn). At its multimedia business, sales increased 19% to SEK 3.4bn ($506m).
The growth in earnings was boosted by a 133% increase to 254m euros ($346.6m) net income at its 50% subsidiary Sony Ericsson Mobile Communications in 2006, which achieved a 47% increase in sales to 2.9bn euros ($3.9bn) last year.