Mobile network equipment maker LM Ericsson told investors that its sales rose 5 percent to $7.4 billion in the first quarter, but its profit for the period fell 55 percent to $60 million. Still, the results were far better than many industry analysts had expected.
Ericsson’s mobile infrastructure business developed well in the quarter, considering the present market environment and the declining U.S. dollar, noted Ericsson CEO Carl-Henric Svanberg. “The sales development in the quarter reflects the demand for mobile infrastructure, especially in high-growth markets,” Svanberg said. Absent the dollar’s negative impact, “total growth would have been 11 percent in constant currency terms.”
Though the proportion of new network builds in high-growth markets — especially in India — is increasing, “in combination with a weaker U.S. dollar, this continues to put pressure on our margins,” Svanberg explained. Therefore, Ericsson still finds it prudent to be cautious and “plan for a flattish mobile infrastructure market in 2008,” he said.
Coexistence Challenges
Still, Svanberg remains upbeat about the company’s longer-term prospects in light of the rollout of mobile broadband on networks around the world. Subscriber growth on the network side of the business continues strongly — up by 160 million in the first quarter alone. The numbers were “pretty impressive” in March, with China up by around 9 million, and India up by about 7 million, Svanberg said.
The global wideband CDMA subscriber base is also growing. “It’s now over 200 million, and the number of HSPDA (High-Speed Downlink Packet Access) subscribers within that is also growing quite quickly,” Svanberg noted.
What is important to understand here, Svanberg said, is that all these mobile technologies will continue to coexist for years to come.
“In the early days, one technology matured and was eventually replaced by another,” he noted. “Now, with so many subscribers and such…