Swedish Mobile telecom equipment maker Ericsson has shocked the cocaine nose jobs of Wall Street by posting a a slightly bigger than expected first-quarter operating loss.
The outfit said that the current miserable industry trends and business mix in mobile broadband from 2016 were expected to prevail in 2017.
Sweden’s Ericsson posted an operating loss of $1.4 billion as previously announced provisions, write-downs and restructuring costs pushed it deeper into the red.
All this compared to a modest profit in the year-ago quarter and was just below what Wall Street had expected.
Sales at Ericsson, one of the top global mobile networks equipment makers, were $5.23 billion, below a consensus forecast of $5.34 billion, while the gross margin came in at 13.9 percent compared to the 17.9 percent seen by analysts.
Ericsson will refocus its business for managed services, explore options for its loss-making media arm and take several writedowns.
The move is the first from its new CEO which is supposed to lead the Swedish telecoms equipment maker out of its worst crisis in a decade
Board member Borje Ekholm took over as CEO in January and the markets had been awaiting for his cunning plan to get out of the mess the company is in.
The firm is grappling with shrinking markets and fierce competition from China’s Huawei, Finland’s Nokia and the rise of the Ice Giants trying to cross the Bridge of Bifrost (we made the last one up).
The Swedish company said it would take $797 million-$1.02 billion in the first quarter related to recent negative developments in certain large customer projects. This has worried some analysts who fear that taking that much cash out of the bank might indicate the company is a bit borked.
The company will also write down assets in the first quarter, with an estimated impact on operating income of $342-$456 million, it said in a statement.
Ekholm said he expected his bottom line to be well and truly massaged and for significant improvements to be seen in 2018.
“Beyond that I am convinced that Ericsson, on a sustainable basis, can at least double the 2016 Group operating margin, excluding restructuring charges,” he said.
In a sign that carmakers are gearing up for the electric car revolution, BMW , Daimler , Ford, and Volkswagen have entered into a partnership to create a network of high-speed charging stations for electric vehicles across Europe.
The new chargers will be capable of giving up to 350 kW of power which is three times more than Tesla’s Supercharging stations and according to a statement from the Big Motor the result will be “the highest-powered charging network in Europe”.
Construction of the network will begin in 2017 with “about 400 sites” being targeted, and that the network will have “thousands of high-powered charging points” available by 2020.
The four major conglomerates will be “equal partners” in the joint venture, but according to the statement they are encouraging other manufacturers to “participate in the network”.
The move is designed to head off a standards war happening with fast charging networks. The charging network announced today will use the Combined Charging System (CCS) technology, which is what that most major automakers already use for their EVs.
Nissan, Toyota, and Honda are not big fans of CCS, because many of their EVs and plug-in hybrids use a competing standard known as CHAdeMO.
Swedish outfit Ericsson has been massaging some figures and consulting some runes, and reached the conclusion that global subscriptions for smartphones will almost double by 2022.
This will mean that mobile data traffic will grow by eight times.
The Swedish company said it expected there will be 6.8 billion smartphone subscriptions globally by the end of 2022, up from 3.9 billion in 2016.
In its previous forecast from June this year, Ericsson had said it expected 6.3 billion smartphone subscriptions by the end of 2021.
Ulf Ewaldsson, head of strategy and technology at Ericsson, said the biggest change from its previous report was the jump in 5G subscribers to 550 million in 2022 from 150 million in 2021.
He claimed that a quarter of the new subscribers will be in North America and 10 percent in Asia.
The first 5G networks will be launched at the end of 2017 and Ericsson plans to sell 5G equipment on a “larger scale” in 2018, Ewaldsson said.
Ericsson said mobile data traffic continues to grow, driven by an increase in smartphone subscriptions and data volume per subscription, fuelled primarily by more viewing of video content.
Swedish firm Ericsson and US firm Apple have ended a dispute after the former accused the latter of breaching its patents.
Ericsson had alleged that Apple breached patents on iPads and iPhones for 2G and 4G connectivity.
Apple hasn’t said how much it has paid Ericsson to stop suing it but will pay an initial amount and then pay it royalties for the next seven years.
Ericsson said it was very pleased that the niggles had come to an end and will work closely with Apple to develop new technologies.
Ericsson took legal action in Apple in several countries and, as usual, Apple retailiated by suing Ericsson.
That’s how these sort of disputes work in the technology industry, with lawyers doing particularly well out of the bickering.
While Volkswagen is in deep water worldwide because it tampered with energy efficiency software, the car industry as a whole is leading the way implementing the internet of things (IoT).
ABI Research said that by 2020, there will be $60 billion worth of global telematics and “infotainment” service revenues.
But the surprising thing is that it will be 3G and not 4G networks that will be the primary connection technology.
4G won’t come into its own until after 2020, according to research director Dan Shey.
He said that there will be exceptions to the general rule that vertical markets are slow to implement the latest technology – with the US, Korea and Japan implementing 4G but even then that won’t happen until 2019 or 2019.
By 2020, vendors including Ericsson, Verizon, Wireless Car and Airbiquity will grab the lion’s share of the market.
The car industry will also shift into a cloud based approach to connect everything up.
ABI believes the IoT will be powered by open source hardware reference designs and third party mobile integration, putting pressure on existing vendors like Harman and Bosch to radically shift their design models.
LTE protocols being developed will pose complement existing public safety networks and that market alone will be worth $5 billion by 2020.
That’s according to ABI Research, which said that existing safety protocols like TETRA and P25 are well established because they are so stable.
But LTE vendors are working with both TETRA and P25 vendors to introduce LTE (4G) capabilities.
ABI said that since Release 10, 3GPP has included enhancements which improve the mission critical features of LTE.
LTE-Relay extends network coverage while LTE-Direct lets public safety devices create direct point-to-point communication without needing a base station.
Release 13 of 3GPP will standardise indoor positioning and push to talk capabilities.
A number of vendors is working together to show the advantages of a single unified broadband and narrowband system, with Motorola, Ericsson, Harris and Nokia working together.
ABI believes that the first markets to have a fully working public safety network will be the USA, the UK and South Korea.
A survey performed by IHS said that the world is slowly moving to true 4G, but the path of telecommunications is still far from smooth.
Stephane Teral, research director for mobile said “the 4G experience is still far from consistent and is falling short of expectations.
She said that the debate over 5G is being accompanied by “fanfare, hype and confusion, but little substance about what it is exactly and what it is not. For now the mindset is still locked into mobile broadband as we know it with LTE, so it’s good that the ITU has just stepped in to define 5G in its brand new IMT-2020”.
She said Ericsson, Huawei and Nokia are the top LTE (4G) equipment manufacturers. And commercial voice over LTE (VoLTE) will ramp in volume this year and next year.
And although vendors are talking about 4G network functions virtualisation migration, Teral said that won’t happen very fast because most LTE networks are new, and mobile operators simply aren’t ready to migrate.
Market intelligence company ABI Research said that mobile broadband and the high speed performance of LTE means the market for mobile network monitoring and optimisation will be worth over $40 billion over the next five years.
And it’s China that’s leading the rush – with widespread adoption of SSL encryption being a game changer.
Practice director Joe Hoffman believes that mobile optimisation will become more important than ever before.
“The advent of all IP services, including VoLTE, VoWi-Fi and LTE-U require close attention from the operator,” he said. “All leading network infrastructure vendors, including Ericsson, Nokia Networks and Alcatel-Lucent, offer their own or partnered solutions. Likewise, the independents, such as Citrix, ByteMobile and Openwave Mobility, provide differentiated, targeted and ready-to-use solutions for every mobile broadband operator.”
ABI believes that capacity improvement will be such that there will be virtually free network and spectrum gear.
Nokia has announced that it is in talks to buy Alcatel-Lucent.
The deal could create a European telecoms equipment group worth over $42.16 billion, if the regulators love it of course.
A purchase of Alcatel-Lucent by Nokia could cause problems in France. French officials have promoted the idea of creating pan-European giants to compete globally, in the model of Franco-German aerospace firm Airbus. But Alcatel-Lucent is also a major employer and symbolic of French industry.
One French government official said that any deal involving Alcatel-Lucent would likely have to be structured to keep a significant French influence in the new company for the deal to pass muster in Paris.
Such a deal would put the fear of God into the market leader Ericsson
In a joint announcement, the pair said “there can be no certainty at this stage that these discussions will result in any agreement or transaction.”
The deal currently under consideration is a “full combination” that would entail Nokia making a public offer for Alcatel-Lucent stock, the companies said. The deal could still fall apart, they added.
It isn’t clear if the parties have agreed on a valuation. Alcatel-Lucent’s market capitalization stands at roughly $11.63 billion, while Nokia’s market capitalization is about €28 billion.
Talk about a merger has been going on for years. Many have considered a good idea as it would reshape the telecommunications-equipment business by creating a company with a combined 2014 revenue of €25.9 billion and more than 100,000 employees in businesses spanning wireless communications and Internet routing.