Ericsson 3Q reassures, NSN maintains

21 Oct 2008

After the financial and psychological shocks of the past month, Ericsson's quarterly result was reassuringly sound.

The wireless networks leader boosted revenue by 13% and increased its gross margin by 1.4 points. It posted positive cash flow and said sales were up in all regions except western Europe.

Ericsson's stock price spiked nearly 20%, as did Google's last week when it announced a 26% boost in net income. IBM and Intel also have posted positive results in the past three weeks.

But that's looking in the rearview mirror. It's the road ahead that has us so alarmed.

Ericsson CEO Carl-Henric Svanberg said the company had a positive longer-term view, but admitted "as we look into 2009, we continue to plan for a flattish market."

Rival Nokia Siemens Networks saw sales contract 4.7%, although it says much of this was to a result of currency fluctuations. In any case, it was enough to narrow its loss to EUR1 million compared with EUR120 million a year ago.

NSN said it expects the networks and services market to be flat in 2008, but expects to be able to maintain market share.

That's as specific as it gets. As Svanberg says, it's "hard to predict how operators will act and to what extent consumer telecom spending will be affected."

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