Ericsson takes hit from component shortage


Ericsson takes hit from component shortage

Alex Scroxton

Ericsson, the Swedish networking and comms kit giant, has blamed a components shortage for an 8% year-on-year decline in group sales, indicating that the networking supply chain is still struggling to get back into gear after the global downturn.

Net sales hit SEK 48bn (£4.22bn) in the three months to the end of June after supply chain bottlenecks took SEK 3-4bn out of the picture.

Gross margins showed signed of improvement due to business mix and efficiency gains, while net income improved both year-on-year and sequentially, up to SEK 2bn from SEK 800m in the year-ago quarter.

By division, Networks sales were down 12% year-on-year to SEK 25.5bn as voice-related sales slumped, although mobile broadband and CDMA revenues partly offset the decline.

Not reported in the Networks business figures were sales from the company's newly acquired stake in LG-Nortel - now renamed LG-Ericsson - which was officially consolidated on 30 June. Ericsson said it expects the unit to be accretive to earnings within the next 12 months.

Meanwhile, Global Services sales were flat at SEK 20bn, mainly due to lower network rollout activity driven by fewer turnkey projects and the aforementioned supply chain issues.

Multimedia revenues were down 27% to SEK 2.4bn on weak demand for revenue management solutions in emerging markets.

Sony Ericsson, the firm's mobility-focused JV with the Japanese electronics behemoth, made sales of €1.75bn (£1,45bn), up 4% year-on-year and 25% sequentially.

The unit said it saw improved product and geographical mix, even though units shipped were actually down 20% on this time last year.

ST-Ericsson, the company's wireless platform developer, saw sales  down 18% to $544m (£350.9m) and posted a net loss of $139m.

Join the conversation Comment



    Contribute to the conversation

    All fields are required. Comments will appear at the bottom of the article.