Ericsson sees signs of improvement after fourth straight quarterly loss

Competition from China’s Huawei and Finland’s Nokia has hurt Ericsson. (Reuters)
Updated 20 October 2017
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Ericsson sees signs of improvement after fourth straight quarterly loss

STOCKHOLM: Mobile network gear maker Ericsson said it had detected signs of improvement after posting a steeper than expected quarterly loss on Friday, helping send its languishing shares up as much as 5 percent.
Once the world’s top maker of mobile network equipment, Sweden’s Ericsson faces a declining market for older network 2G, 3G and 4G gear while needing to step up investments in next-generation 5G equipment to retain market share.
After replacing management in 2016, Ericsson has embarked on a restructuring program to exit unprofitable network services deals and reverse course after an ill-timed bid to diversify beyond core telecom markets.
“We see a stabilized performance in a challenging market. We also see signs of improvements in our performance,” Chief Executive Boerje Ekholm said on a conference call.
“Yes, there is still a long way to go ... but we are also seeing signs that we are stabilizing our performance and that we are getting control of our projects and products,” Ekholm said.
The Swedish company posted its fourth consecutive money-losing quarter, with an operating loss of 4.8 billion Swedish crowns ($588.7 million) that was 37 percent worse than the average loss estimated by analysts.
Third-quarter sales of 47.8 billion crowns were down 3 percent in constant currencies and the company warned its usual year-end sales bounce would not be as big as in previous years.
Competition from China’s Huawei and Finland’s Nokia , as well as weak emerging markets and falling spending by telecoms operators, has hurt Ericsson, while demand for next-generation 5G technology is still several years away.
While it cut 3,000 jobs during the third quarter, it added 1,100 recruits in research and development in order to be ready to meet eventual demand for 5G networks.
Sales were stable in North America while growing in Brazil and the Middle East, but these positive trends were offset by a decline in China, Ericsson said.
In the current quarter, it said network sales would not grow as fast because Chinese network operators are slashing spending on higher speed 4G mobile networks after a massive building spree in recent years.
Ericsson said it had increased its share of 4G networks in China, which was vital to ensure it wins repeat business in future 5G network there. China will put pressure on overall fourth-quarter margins in its network business, it said.
It is also renegotiating or exiting unprofitable service contracts in its networks unit as it aims to double its operating margin to 12 percent after 2018, a target analysts see as unlikely. It has exited or renegotiated 13 out of 42 contracts it considers problematic, improving profits.
Restructuring weighed on the quarter as the company repeated it aimed to reduce costs by at least 10 billion crowns, or around $1.2 billion, from the middle of next year.
Ericsson shares shot up just over 5 percent in early trade and were up 3.3 percent at 50.4 crowns by 0942 GMT, but remain some 4 percent lower for the year to date.


UAE indicates full compliance with US sanctions on Iran

Updated 19 November 2018
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UAE indicates full compliance with US sanctions on Iran

  • The US announced on Nov. 5 a series of sanctions targeting Iran’s banks, shipping sector, national airline and 200 individuals
  • UAE’s trade with Iran, which is expected to decline further, fell to $17 billion in 2017 from a peak of $20 billion in 2013

DUBAI: The United Arab Emirates is fully complying with sanctions imposed this month by the United States on Iran even though it will mean a further drop in trade with Tehran, said a UAE economy ministry official.

Abu Dhabi, the political capital of the UAE federation, has taken a tough stand on Tehran, although Dubai, the country’s business hub, has traditionally been a major trading partner with Iran.

Washington announced on Nov. 5 a series of sanctions targeting Iran’s banks, shipping sector, national airline and 200 individuals after President Donald Trump pulled the United States out of an international nuclear deal with Tehran.

“We are implementing the sanctions,” Abdullah Al-Saleh, undersecretary for foreign trade and industry, said in an interview in Dubai.

 

The UAE is enforcing the US sanction regime “as it is published by the United States,” Al-Saleh said, adding that the relevant authorities would ensure compliance.

Al-Saleh said the UAE’s trade with Iran is expected to decline this year and next year due to the sanctions, after falling to $17 billion in 2017 from a peak of $20 billion in 2013.

Most trade consists of re-exports via Dubai to Iran, which lies across the Gulf.

The sanctions are part of a wider effort by the Trump administration to diminish Iranian influence in the Middle East.

The UAE is among US allies in the Gulf region that staunchly oppose Iranian foreign policy and swiftly backed Washington’s decision. It is also a member of a coalition that is opposing the Iran-aligned Houthi group in Yemen’s civil war.

Compliance will mean UAE companies do not face difficulties in the United States, and the UAE government will look to boost trade with other markets such as Africa and Asia to offset the impact of the sanctions on its own economy, Al-Saleh said, repeating an existing government policy to diversify trade.

Trump’s administration has threatened those who continue to do business with Iran with the prospect of losing access to the US market, although it has given temporary exemptions to eight importing countries to keep buying Iranian oil.

The European Union, France, Germany and Britain, which are trying to save the nuclear deal, have said they regret the US decision and will seek to protect European companies doing legitimate business with Tehran.

FACTOID

The US has given temporary exemptions to eight importing countries to keep buying Iranian oil.