Displaying items by tag: Growth
Börje Ekholm reaffirms commitment to Ericsson's focus strategy as financial results announced
Ericsson published its financial results for Q3 2019, reporting 3% percent growth in sales. Total sales were SEK 57.1 billion(b)., equivalent to AED 21.5 b. Sales adjusted for comparable units and currency increased by 3% driven by strong growth in North America and North East Asia.
For Q3 19, operating income was impacted by cost provisions of USD -1.2 b. (SEK -11.5 b.) corresponding to a margin of 11.4% excluding restructuring costs, the US investigation costs of USD -1.2 b. (SEK -11.5 b.) and the refund of social security costs of SEK 0.9 b.
Ericsson previously communicated that its third-quarter 2019 results will be impacted by a 12 billion Swedish krona provision. This is due to the investigations by U.S. authorities.
Net income suffered a SEK -6.9 b. loss, also negatively impacted by the investigation.
Free cash flow before M&A was SEK 5.5 b., showing a strong financial position.
Gross margin excluding restructuring charges was 37.8% (36.9%) with improvements in Managed Services, Digital Services and Networks. The gross margin in the previous quarter was 36.7% and 36.9% last year.
Strategic contracts in Networks, with initially low margins, taken to strengthen the market position, are expected to have a somewhat increased negative impact on gross margin short term without jeopardizing the 2020 target.
Ericsson has played a pivotal role in the advancement of 5G technology. Large 5G deployments in China are expected to commence in 2020. Ericsson has invested in R&D and supply chain capacity, aiming to increase market share. Based on historic experience margins are initially challenging but turn positive over the lifespan of a contract.
Commenting on the results, to Börje Ekholm, President and CEO of Ericsson said:
“We continue to see strong momentum in our business, based on the strategy to increase our investments for technology leadership, including 5G… Our focused strategy, introduced in 2017, is aimed at building a stronger Ericsson longer term. With clear focus on our operator customers the strategy stands on a foundation of increased investments in R&D for technology and cost leadership, and growing market footprint. Increased R&D efforts, which will continue, have resulted in a competitive portfolio driving improved gross margin.”
He added, “An important indicator for our execution of the strategy is the improvement in gross margin. The gross margin in the quarter ended at 37.8% compared with 36.9% last year and 36.7% last quarter. Within the 0.8 percentage point sequential decline in Networks gross margin, we have absorbed the margin impact and inventory provisions related to strategic contracts.”
In the report, Börje Ekholm believes their success is driven by the adopters of 5G. He also announced that 5G has taken off earlier than expected.
“5G is taking off faster than earlier anticipated and we see initial 5G buildout as a capacity enhancer in metropolitan areas. However, over time, new exciting innovations for 5G will come with industrial and IoT use cases, leveraging the speed, latency and security characteristics of 5G. This provides opportunities for our customers to capture new revenues as they provide additional benefits to consumers and businesses.”
“Our IoT business is growing almost twice as fast as the estimated market growth of 20-25% per year. We have more than 4,500 enterprises on our IoT platform and the number of connected devices on the platform has more than doubled year to date. To fully leverage our position and capture new recurring revenue streams we are increasing our investments in IoT within Emerging Business. With this investment, we do not expect to reach breakeven for the segment next year, and instead incur losses of SEK -1.5 to -2.0 b”
Ericsson announces positive Q1 results driven by North American market
Ericsson has reported its first quarter results which reflect an increase driven by the growth the Swedish vendor has registered in North America.
Uber’s growth slows as it prepares for IPO
US ride-hailing colossus Uber disclosed its financial earnings for the final quarter of 2018 which showed its revenue growth has slowed ahead of its much anticipated stock market debut.
The financial figures released by Uber indicated that for the final three months of the year its loss amounted to $865 million, compared with $1.1 billion in the same period a year earlier.
The San Francisco-based firm reported revenue of $3 billion, which represented a 25 percent increase from a year earlier. Uber remains a private company, but routinely discloses some earnings information.
CEO Dara Khosrowshahi has managed to guide Uber through choppy waters since assuming the CEO role from Travis Kalanick.
He is also being tasked with the responsibility of steering the high-value startup to a stock market debut this year, and has promised greater transparency as he seeks to restore confidence in the global ridesharing leader that has been hit by a wave of misconduct scandals and has become embroiled in a series of legal battles regarding its services, particularly in Europe.
Revenue for the full year rose 43 percent to $11.3 billion, with Uber's annual loss shrinking 15 percent to $1.8 billion, according to an official statement from the startup.
Uber operates its’ rideshare business in dozens of countries and has expanded to new areas including food delivery, electric scooters and bikes. The company is recognized as the largest of the venture-backed startups with a presumed valuation of some $70 billion.
Uber CFO Nelson Chai expressed his satisfaction with Uber’s financial results and said, “Last year was our strongest yet, and Q4 set another record for engagement on our platform. Our ridesharing business maintained category leadership in all regions we serve, Uber Freight gained exciting traction in the US, JUMP e-bikes and e-scooters are on the road in over a dozen cities."
Based on gross bookings, Uber Eats has apparently become the largest online food delivery business outside of China.
Blow for Samsung US as CEO steps down
South Korean conglomerate Samsung has suffered a blow following the announcement that the CEO of Samsung Electronics in North America has decided to retire.
Tim Baxter has been with the company for over 12 years and has played a pivotal role in establishing Samsung as a powerhouse in the North America ICT market in his role as CEO.
Baxter has shown incredible leadership and vision and as ensured Samsung’s products has resonated with American consumers. He announced his decision to retire in a LinkedIn post, and confirmed that he pass the reins to his current deputy in North America Young Hoon Eom.
Samsung confirmed the departure in an official statement to Mobile World Live and placed on record its sincere thanks to Baxter who they described as an ‘exceptional business leader’ that has helped define Samsung as a pioneering innovator in the consumer electronics industry.
Baxter joined Samsung as EVP of sales and marketing for consumer electronics in 2006, and held various leadership positions before being appointed to his current post in July 2017. The role gave him full autonomy of Samsung’s $30 billion consumer and enterprise businesses in the US and Canada, including oversight of teams across mobile, consumer electronics, home appliances, customer care, services and new business.
The move comes at a pivotal moment as mobile operators across the US and Canada, start the transition towards the deployment of 5G. All four tier-one US operators have confirmed that they are working with Samsung on 5G handsets set for release in the first half of 2019.
Ericsson beats expectations in Q4
Swedish telecom vendor Ericsson has surprised analysts with reduced losses in Q4 driven by the increase of sales revenues and costs reduction. Sales as reported increased by 10% Year-on-Year and sales adjusted for comparable units and currency increased by 4%. Costs related to revised Business Support Systems (BSS) strategy impacted Digital Services operating income in Q4.
US tech giant signs content agreement with Samsung
US technology behemoth Apple has signed a new agreement with Samsung in relation to its streaming and content services in an effort to offset a decline in iPhone sales. The deal brokered between Apple and the South Korean conglomerate will enable the use of iTunes streaming services on Samsung smart TVs.
Huawei changes strategic approach in effort to penetrate African smartphone market
Chinese smartphone vendor Huawei Technologies has altered its strategic approach in Kenya in a bid to boost sales of its handsets. It has restructured the price of some of its devices and is now showcasing smartphones that are retailing at between $100-200. It is hoping that a sharp increase in sales will boost its market share in Kenya.
Huawei is currently positioned as number three in relation to market share in the African nation which has been described as a fast-growing local smart devices market. Huawei is trailing South Korean conglomerate Samsung Electronics and Tecno which is owned by Hong Kong’s Transition Holdings.
Huawei’s manager in Kenya, Derek Du said it entered the smartphone market by introducing three smart phones, but it didn’t focus on products retailing for under $200 and that costed the company long-term. In an effort to increase its market share in that segment from 4% to 15% it will overall its entire strategic approach.
Kenya’s telecommunications incumbent Safaricom enjoys a 72% market share (around 28m users) and they reported that there is now 13 million smartphones on its network, which is a significant jump from 10 million last year.
Kenya consumers have finally parted with their well-worn standard phones in favor of relatively cheap devices that offer them faster internet speed and access to applications such as WhatsApp, online banking and taxi-hailing services. According to Du, Huawei has switched its strategic focus after it became evidently clear that the average Kenyan consumer is price sensitive.
Du added: “The new focus on the lower end of the market has come about because the Kenyan consumer is price-sensitive. The $100-200 is the key part we can play. If we can bring it up, it means we will also bring up the whole market share.”
He believes that change will enable Huawei to boost its overall market share to around 25-30%, from the current 14% it has been rooted on for the last two years. Research has revealed that the average Kenyan worker earns an annual wage of $1,200, which subsequently means that most people can’t afford expensive smartphones.
Huawei’s previous approach centered on their mid-range smartphones were it enjoys a 30% market share. Huawei has enjoyed a successful twelve months globally, and the Chinese conglomerate, based in Shenzhen, is now seen as a real threat to the smartphone monopoly which is dominated by Samsung and Apple.
Huawei’s African boss said that the Kenyan economy was enjoying a resurgent comeback after a difficult number of years, and is in a stable position. This makes it an attractable market for investors, and du has reiterated its commitment to growing its business in Kenya.
Canada’s fastest growing smartphone repair chain announces exciting expansion plans
Mobile Klinik, Canada’s fastest growing professional smartphone and tablet repair chain, today announced completion of an acquisition of mobilFIX and Dr. Mobile smartphone repair businesses for an undisclosed amount. The chain has nine smartphone repair outlets, with seven established locations in the Edmonton area and two other stores opening soon, also in Alberta.
“This acquisition both accelerates our profitable growth and will anchor our growth strategy in Western Canada,” said Rob Bruce, Founding Partner and CEO, Mobile Klinik. “We are excited to work with the talented team at mobilFIX and Dr. Mobile to serve Albertans with while-you-wait, fully warrantied professional smartphone and tablet repair.
Sunil Goel, former CEO of mobilFIX and Dr. Mobile (www.mobilfix.ca) will take on a new national role at Mobile Klinik. He said: “Joining forces with Mobile Klinik gives us access to growth capital, experienced leadership, and an opportunity for our team to join the most professional smartphone repair company in Canada.”
mobilFIX and Dr. Mobile, established in 2013, operate two locations each in West Edmonton Mall. mobilFIX operates another three locations in the Edmonton area. All seven current locations will remain open to serve customers as they transition to the Mobile Klinik brand. The other two locations will open shortly as Mobile Klinik.
Mobile Klinik offers dedicated professional smartphone and tablet repair, most times in less than 60 minutes. Expert technicians offer immediate, on-site diagnosis and quote to repair a broken smartphone or tablet with premium quality parts and a lifetime warranty on parts and labour.
Mobile Klinik’s concept of while you wait professional smartphone repair was introduced to Canada by four Canadian wireless and retail industry leaders: Rob Bruce, former President, Rogers Communications; Ken Campbell, former CEO, WIND Mobile; and Alain Adam and Naaman Zorub, entrepreneurs who operate a number of wireless retail stores and other businesses in Ottawa and Gatineau. Since opening the first store in Ottawa in September 2015, and including today’s announced acquisition, Mobile Klinik operates 20 locations in major shopping malls and other high-traffic retail locations in Ontario, Quebec and Alberta. More locations will open soon.
Chinese operators post positive first-half financial results after difficult 2016
Three of China’s state-run mobile operators have posted positive financial results for the first-half of 2017, after enduring a difficult 2016. China Telecom, China Unicom and China Mobile all made solid gains on their bottom line, largely due to the continued rapid demand for data and 4G uptake.
All three entities suffered a decline in earnings during 2016 - but in the first-half of this year they’ve made a combined profit of CYN 77.6 billion ($11.6 billion) compared with a combined profit of CYN127.6 billion for all of 2016.
Analysts have attributed the success of the state-owned mobile operators to significant 4G subscriber gains from January-June. The trio took its LTE user base to 885 million. In addition to this, it was further disclosed that both China Telecom and China Mobile are increasingly close to reaching the 70% 4G penetration mark, with China Unicom lagging behind by a reported 14%.
China Mobile remains the market incumbent with a 64% share of total subscribers, 67% of which are 4G users. The Chinese operators ended June with 3.47 million 4G base stations, the breakdown of which consisted of China Mobile (1.65M) China Telecom (1.05M) and China Unicom (770,000). It was also disclosed that China Mobile has announced its intentions to construct an additional 120,000 4G sites in the second-half of next year, whilst China Telecom has said it will deploy another 110,000 by the end of this year.
Mobile voice revenue continues to decline sharply due to the dominance of OTT’s, but all three operators still managed to grow mobile service revenue by 5%. It’s the universal demand for data which has contributed to the operator’s success so far this year. China Telecom has enjoyed a healthy increase of 24% in mobile data, accumulating CYN55.3 billion in the process. China Mobile reported a 34% increase in mobile data accumulating CYN185 billion, whilst China Unicom’s data growth increased by 21%, accumulating CYN43.5 billion.
The state-run operators have signed up 23.7 million 4G subscribers in July, which takes the country’s total to 908M. However, China Mobile has announced its plans to end 2017 by amassing 630M 4G subs, which analysts suggest is a target they should easily surpass. At this extraordinary pace, China will likely end the year with well over 1 billion 4G customers, which would also subsequently mean that China would have 40% of the 2.45 billion global LTE connections by the end of the year.
Samsung to create 440,000 new jobs with $18.6 billion investment in South Korea
South Korean conglomerate Samsung Electronics has announced its plans to invest 21.4 trillion won ($18.6 billion) into South Korea in an effort to strengthen and extend its lead in memory chips and next-generation displays for smartphones. Samsung has claimed that the investment could create up to 440,000 new jobs from now until 2021 – which would significantly boost the South Korean economy.
Samsung is the world’s largest chip maker by revenue and has indicated it intends to invest 14.4 trillion won by 2021 in its new NAND factory in Pyeongtaek. In addition to this, it disclosed that it plans to invest 6 trillion won in a new semiconductor production facility in Hwaseong, but declined to elaborate further on the timing or product.
Samsung will also develop a new production line to its NAND plant in Xi’an, China, which investment analysts have suggested is in response to booming demand for long-term data storage chips. However, it has thus far not set an investment amount or time frame.
Industry experts have predicted that Samsung and other leading memory makers will post record profit in 2017 - caused primarily due to a persistent shortage and demand for more capability in smartphones and servers increase prices. Industry sources and analysts said the shortage is more acute for NAND chips due to increasing adoption of high-end storage products.
Analysts have also claimed that Samsung’s production technologies are much more mature and are at least a year ahead of its rivals such as Toshiba and SK Hynix. Samsung invests more than $10 billion in semiconductors on an annual basis, which has provided the foundations for Samsung to take the lead, and according to analysts this latest investment strategy will only widen the gap even further.
Samsung and its rivals Toshiba and SK Hynix has committed tens of billions of dollars to boost NAND output in recent years, yet analysts and industry sources have said that they believe shortages will persist through 2017 and new facilities created will not make any meaningful supply contributions until next year. However, some have suggested that additional capacity could lead to oversupply in early 2018, but that price crashes are unlikely as smartphone makers opt for greater internal storage.
"I believe NAND market conditions will continue to favor suppliers until 2020," said HMC Investment analyst Greg Roh. Any oversupply issues will be temporary and limited to seasonally weaker periods, he said.
Samsung's investment plan comes on the back of South Korean President Moon Jae-in plea for local businesses to create more jobs and help reinvigorate the economy. In China, some South Korean firms have suffered from sales decline or have been forced to scale down operations due to retaliatory measures from Beijing over the deployment of a US anti-missile defense system outside Seoul. However, China smartphone makers remain one of Samsung’s biggest customers and are among its biggest buyers of memory chips and displays.