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With Q1 Revenues Down, Ericsson Awaits Growth in NFV, SDN & Small Cells

By Paula Bernier April 23, 2014

Ericsson’s first quarter revenues were down significantly, the company reported today, but things were looking up in terms of net profit. Sales in the quarter were off 7 percent from the first quarter of last year and decreased 28 percent from last quarter, marking Ericsson’s lowest quarterly revenue in more than three years. Meanwhile, operating margin improved year over year improved in all segments to 5.5 percent.

The decline in sales is primarily due to lower revenues from two large mobile broadband coverage projects in North America, which peaked in the first half of 2013, and reduced activity in Japan, as reported previously by NFVZone. That, however, was offset in part by the growth Ericsson has seen in China, Latin America, and the Middle East.

In an effort to highlight some of the bright spots on the horizon, Ericsson Networks Head Johan Wibergh in an interview today with NFVZone mentioned that the company in the first quarter won some business from Vodafone, which plans to use some of the profit from its deal with Verizon Wireless to make an addition $9 billion investment to improve networks in Europe, and emerging markets like India and South Africa.

Ericsson also expects network functions virtualization and software-defined networking to create opportunities in the long-term future. In the first quarter Ericsson was tapped by AT&T as one of its user-defined cloud vendors. However, Wibergh said NFV and SDN aren’t expected to significantly impact its financials in the near term.

In-building small cells are also expected to be a growing area of opportunity for Ericsson, said Wibergh. The company’s small cell solution, Ericsson Radio Dot System, will be in trials with multiple tier 1 carriers around the world this summer, and will ship later in the year. That product, he said, is expected to have “tremendous impact” for Ericsson starting in 2015.

In other recent news from Ericsson, the company on April 14 announced the resignation of senior vice president and global head of strategy Douglas Gilstrap, which will be effective Aug. 1.

Edited by Stefania Viscusi

Executive Editor, TMC

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