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July 21, 2014

Ericsson Releases Second Quarter Earnings Report

Ericsson released its second quarter earnings report last week, and the company seems to be showing a bit of a mixed bag. While the actual sales numbers for the second quarter of 2014 were decent overall, they were down slightly (from $54.8 to $55.3 billion) from the first quarter of the year. While sales dropped a little bit from earlier this year, the numbers were up quite sharply from the same quarter of last year. Ericsson is crediting a strong performance in the Networks segment for its better performance in 2014 compared to 2013.

Sales in the quarter, were driven by sustained growth in the Middle East, China and India, according to the company. Ericsson says that the year actually started quite slowly, but it is continuing to honor contracts that deal with 4G/LTE, and this is leading to sales numbers gradually climbing.

The firm has also blamed some of the problems with its numbers on political unrest in the Middle East and Africa. The problems that are erupting in the Ukraine and Russia are also worrisome, but Ericsson is saying that so far, that particular region is not affecting the company’s sales. Because the firm mentioned the area in its earnings report, it stands to reason there is some unease, and it might eventually start having an impact if problems like the Malaysian Airliner being shot down intensify.

Ericsson added that it feels its modems business is going to start seeing a real growth in sales by the end of this year, thanks to its M7450 modem, which will be in several smartphones and data devices. While sales were down slightly from the first quarter, the operating cash flow of the firm was in the black thanks to an improved overall income. The firm believes its execution of the company-wide order-to-cash initiative is working well in this area and it is showing great progress.

Edited by Adam Brandt

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