Ericsson's investor day 2012
STOCKHOLM, SWEDEN, Nov 06, 2012 (Menafn - MARKETWIRE via COMTEX) --* Management outlines list of ongoing activities to improveprofitability
* The fundamentals for longer-term positive development for theindustry remain solid. Ericsson continues to invest in its maincompetitive assets - technology leadership, services leadershipand global scale in order to become a leading ICT solutionsprovider in telecoms
* Ericsson estimates the overall addressable equipment market willshow a CAGR of 3-5% 2012-2015. Telecom services expected to showa CAGR of 5-7% and support solutions expected to show a CAGR of9-11%
Today, Ericsson ERIC will hold its annual Investor Day inStockholm.President and CEO Hans Vestberg will elaborate on howEricsson will leverage its current assets - technology leadership,services leadership, global scale - tomove from being a leadingmobile infrastructure vendor to become a leading Information andCommunications Technology solutions provider in telecoms.
"This development will naturally imply a future business mix forEricsson withmore recurring software and services revenues. However,hardware will always be part of the mix and a key differentiator forEricsson," says Hans Vestberg.
Ericsson is currently in a phase with a higher share of coverage thancapacityprojects due to a high proportion of hardware being rolledout. At the InvestorDay Management will reiterate that this mix isexpected to prevail short-term but that the negative impact from thenetwork modernization projects in Europe will start to graduallydecline end 2012. Hans Vestberg will point to the factthat thecompany presently has a selective approach to market shareinvestmentsand a strong focus on commercial management. Managementwill also discuss someuncertainties going forward such asmacroeconomic factors, the competitive situation and operatorconsolidation.
A market outlook for 2012-2015 will be presented. Ericsson estimatesthat thetotal network equipment market will show a compound annualgrowth rate (CAGR) of 3-5%. In Ericsson's key equipment marketsegments - radio, IP and transport,core - the CAGR is expected to be4-6%. In radio a CAGR of 2-4% is expected, in IP and transport a CAGRof 6-8% and in core a CAGR of 0-2%. Ericsson expects the market fortelecom services to show a CAGR of 5-7% in the same time period.Themarket for support solutions is forecasted to show a CAGR of9-11%, including a CAGR of 12-14% for the media market. The market forOSS/BSS software and services is expected to show a CAGR of 5-7%.
Ericsson has a leading market position in four out of its sixbusinesses. Inmobile equipment, Ericsson increased its market shareto 38% in 2011. In thethree key equipment market segments, radio, IPand transport, core, the companyhas an aggregated market position of27% which makes Ericsson the largest player. In the fragmentedtelecom services market Ericsson increased its marketshare 2011 from11% to 12%. The company also has a leading market positioninOSS/BSS.
During the Investor Day, Hans Vestberg will elaborate on strategiesto deliverprofitable growth. Areas with portfolio momentum expectedto contribute to top-line growth are mobile broadband, managedservices and OSS/BSS. He will alsodescribe how the company isexpanding beyond its core business in order to capture value fromadjacent industries, while operators continue to be themajorcustomer segment.
Jan Frykhammar, CFO and Executive Vice President, will elaborate onhow Ericssonintends to improve capital efficiency. The workingcapital targets for the company will remain unchanged with DSO ofless than 90 days, payable days ofmore than 60 days and Inventoryturnover of less than 65 days.
Jan Frykhammar will reiterate that the company will continue toproactively identify and execute on additional efficiency gains andcost reductions in orderto improve profitability. He will alsooutline a list of profit improvement areas to reach the compoundoperating income growth of 5-15% required in theExecutivePerformance Stock Plan.
Johan Wibergh, head of business unit Networks and Executive VicePresident, willpoint out key contributors for the segment to returnto double digit operatingmargin. He will mention a number ofexamples of these contributors includingEricsson's ability to gain aprice premium through its technology leadership,business miximprovements, scale and agile software development. RimaQureshi,head of business unit CDMA Mobile Systems, will elaborate onhow all Ericsson'sCDMA customers have successfully evolved intoEricsson's LTE solutions. Ericsson's acquisition of Nortel has beensuccessful and focus for the CDMA operation is now on maximizingbusiness contribution as well as to excel in lifecycle and costmanagement.
Magnus Mandersson, head of business unit Global Services andExecutive Vice President, will describe the company's servicesjourney to drive the transformation to becoming a leading ICTsolutions provider in telecom. Mandersson will outline the continuedfocus on industrialization of services,leveraging global scale andhow the company drives services innovation for continued growth.
Per Borgklint, head of business unit Support Solutions, will discusshow thesegment Support Solutions showed a trend shift Q212 and Q312when it reportedprofit. He will describe the strategy for SupportSolutions with focus on OSS,BSS, Media and m-commerce. Thepresentation will also focus on the characteristics of the businesswhere a subscription based model for recurrentsoftware revenues isbeing introduced.
Ulf Ewaldsson, Chief Technology Officer, will discuss keytechnologies for evolving the networks, including heterogeneousnetworks, 4(th) generation IP,cloud and software defined networks aswell as OSS/BSS and real-time analytics.
At the end of the day, Hans Vestberg will conclude that thefundamentals forlonger-term positive development for the industryremain solid. He will stresshow increased smartphone penetration andconsumers demand for having data connectivity around the clock isdriving increased complexity in the networks.Until now, the majorpart of the investments in the telecom industry has beendirected todevices and applications. Going forward, Ericsson expects theindustry to re-balance investments towards optimizing networkperformance.
"Mobility is becoming even more relevant in the networked society,driving thedemand for our offering," Hans Vestberg will conclude. "Wehave a clear long-term objective to increase our value share from thenetworked society throughbecoming a leading ICT solutions providerin telecom. In the short-term, we aimto improve value creation byfocusing on profitable growth."
Ericsson discloses the informationprovided herein pursuant to the SecuritiesMarkets Act and/or theFinancial Instruments Trading Act. The information wassubmitted forpublication on November 6, 2012 at 2012.
Ericsson's investor day2012: http://hugin.info/1061/R/1655260/534849.pdf
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