* Management outlines list of ongoing activities to improve profitability
* The fundamentals for longer-term positive development for the industry
remain solid. Ericsson continues to invest in its main competitive assets -
technology leadership, services leadership and global scale in order to
become a leading ICT solutions provider in telecoms
* Ericsson estimates the overall addressable equipment market will show a CAGR
of 3-5% 2012-2015. Telecom services expected to show a CAGR of 5-7% and
support solutions expected to show a CAGR of 9-11%
Today, Ericsson (NASDAQ:ERIC) will hold its annual Investor Day in Stockholm.
President and CEO Hans Vestberg will elaborate on how Ericsson will leverage its
current assets - technology leadership, services leadership, global scale - to
move from being a leading mobile infrastructure vendor to become a leading
Information and Communications Technology solutions provider in telecoms.
"This development will naturally imply a future business mix for Ericsson with
more recurring software and services revenues. However, hardware will always be
part of the mix and a key differentiator for Ericsson," says Hans Vestberg.
Ericsson is currently in a phase with a higher share of coverage than capacity
projects due to a high proportion of hardware being rolled out. At the Investor
Day Management will reiterate that this mix is expected to prevail short-term
but that the negative impact from the network modernization projects in Europe
will start to gradually decline end 2012. Hans Vestberg will point to the fact
that the company presently has a selective approach to market share investments
and a strong focus on commercial management. Management will also discuss some
uncertainties going forward such as macroeconomic factors, the competitive
situation and operator consolidation.
A market outlook for 2012-2015 will be presented. Ericsson estimates that the
total network equipment market will show a compound annual growth rate (CAGR) of
3-5%. In Ericsson's key equipment market segments - radio, IP and transport,
core - the CAGR is expected to be 4-6%. In radio a CAGR of 2-4% is expected, in
IP and transport a CAGR of 6-8% and in core a CAGR of 0-2%. Ericsson expects the
market for telecom services to show a CAGR of 5-7% in the same time period. The
market for support solutions is forecasted to show a CAGR of 9-11%, including a
CAGR of 12-14% for the media market. The market for OSS/BSS software and
services is expected to show a CAGR of 5-7%.
Ericsson has a leading market position in four out of its six businesses. In
mobile equipment, Ericsson increased its market share to 38% in 2011. In the
three key equipment market segments, radio, IP and transport, core, the company
has an aggregated market position of 27% which makes Ericsson the largest
player. In the fragmented telecom services market Ericsson increased its market
share 2011 from 11% to 12%. The company also has a leading market position in
OSS/BSS.
During the Investor Day, Hans Vestberg will elaborate on strategies to deliver
profitable growth. Areas with portfolio momentum expected to contribute to top-
line growth are mobile broadband, managed services and OSS/BSS. He will also
describe how the company is expanding beyond its core business in order to
capture value from adjacent industries, while operators continue to be the major
customer segment.
Jan Frykhammar, CFO and Executive Vice President, will elaborate on how Ericsson
intends to improve capital efficiency. The working capital targets for the
company will remain unchanged with DSO of less than 90 days, payable days of
more than 60 days and Inventory turnover of less than 65 days.
Jan Frykhammar will reiterate that the company will continue to proactively
identify and execute on additional efficiency gains and cost reductions in order
to improve profitability. He will also outline a list of profit improvement
areas to reach the compound operating income growth of 5-15% required in the
Executive Performance Stock Plan.
Johan Wibergh, head of business unit Networks and Executive Vice President, will
point out key contributors for the segment to return to double digit operating
margin. He will mention a number of examples of these contributors including
Ericsson's ability to gain a price premium through its technology leadership,
business mix improvements, scale and agile software development. Rima Qureshi,
head of business unit CDMA Mobile Systems, will elaborate on how all Ericsson's
CDMA customers have successfully evolved into Ericsson's LTE solutions.
Ericsson's acquisition of Nortel has been successful and focus for the CDMA
operation is now on maximizing business contribution as well as to excel in life
cycle and cost management.
Magnus Mandersson, head of business unit Global Services and Executive Vice
President, will describe the company's services journey to drive the
transformation to becoming a leading ICT solutions provider in telecom.
Mandersson will outline the continued focus on industrialization of services,
leveraging global scale and how the company drives services innovation for
continued growth.
Per Borgklint, head of business unit Support Solutions, will discuss how the
segment Support Solutions showed a trend shift Q212 and Q312 when it reported
profit. He will describe the strategy for Support Solutions with focus on OSS,
BSS, Media and m-commerce. The presentation will also focus on the
characteristics of the business where a subscription based model for recurrent
software revenues is being introduced.
Ulf Ewaldsson, Chief Technology Officer, will discuss key technologies for
evolving the networks, including heterogeneous networks, 4(th) generation IP,
cloud and software defined networks as well as OSS/BSS and real-time analytics.
At the end of the day, Hans Vestberg will conclude that the fundamentals for
longer-term positive development for the industry remain solid. He will stress
how increased smartphone penetration and consumers demand for having data
connectivity around the clock is driving increased complexity in the networks.
Until now, the major part of the investments in the telecom industry has been
directed to devices and applications. Going forward, Ericsson expects the
industry to re-balance investments towards optimizing network performance.
"Mobility is becoming even more relevant in the networked society, driving the
demand for our offering," Hans Vestberg will conclude. "We have a clear long-
term objective to increase our value share from the networked society through
becoming a leading ICT solutions provider in telecom. In the short-term, we aim
to improve value creation by focusing on profitable growth."
FOR FURTHER INFORMATION, PLEASE CONTACT
Ericsson Corporate Public & Media Relations
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
Ericsson Investor Relations
Phone: +46 10 719 00 00
E-mail: investor.relations@ericsson.com
Ericsson discloses the information provided herein pursuant to the Securities
Markets Act and/or the Financial Instruments Trading Act. The information was
submitted for publication on November 6, 2012 at 2012.
[HUG#1655260]
