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Ericsson improves in Q4, takes loss on JV charge

Thu, 01/31/2013 - 1:15pm
Andrew Berg, Wireless Week

Network equipment maker Ericsson posted a $986 million net loss on a $1.2 billion charge related to the company’s struggling semiconductor business. Revenue was up 5 percent from the same quarter last year, and 23 percent sequentially.

The loss was telegraphed by the company back in December, when it said it would write down a charge associated with its joint venture, ST-Ericsson, which makes semiconductors. Partner STMicroelectronics reportedly wants out of the joint venture.

Ericsson said it will “explore various strategic options for ST-Ericsson assets,” adding that the company believes “the modem technology, which we originally contributed to the JV, has a strategic value to the wireless industry.”

Sales from the company's Networks division improved after declines in the last two quarters. Despite a continued slowdown in CDMA equipment, profitability for the division rose 6 percent sequentially due to higher sales and a higher share of software sales.

Ericsson said North America remained its strongest market, driven by continued investments in mobile broadband and demand for services. Sales in North America were up 51 percent from the same quarter last year to $2.6 billion.

Emerging markets, where the company had seen slowing growth, such as Southeast Asia and Oceania and Sub-Saharan Africa, also gradually improved during the year.

“With present visibility of customer demand, and with the current global economic development, underlying business mix is expected to gradually shift toward more capacity projects during the second half of 2013,” said CEO Hans Vestberg.

Shares of Ericsson were up more than 10 percent to $11.77 in early trading.

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