Ericsson recorded a 14% rise in Q4 net income to 9.73 billion Swedish kronor ($1.4b), or 0.61 krona/share, on 18% higher revenue to 53.7b kronor ($7.7b), beating analysts' average estimate (except sales) of 8.75b kronor, or 0.55 krona/share, on sales of 53.8b kronor (a $14m miss). Its shares are under pressure in morning trading in Stockholm, down by about 6%, due to its warning of slower growth in its main network market this year in the "mid-single digits," compared to a previous forecast of "moderate expansion" in the 5-10% range. Bloomberg quotes a Stockholm-based analyst who comments, "Longer term, 2007 should be an exciting year for Ericsson with events such as mergers among rivals, possible 3G license awards in China and some big orders in India." Sony Ericsson contributed slightly over 20% to Ericsson's earnings, after the JV saw its Q4 net triple and grew its market share by 2% to 8.7% in 2006. Ericsson proposed a dividend hike to 0.50 krona, from 0.45 krona.
Sources: Press release, Bloomberg, MarketWatch
Commentary: Sony Ericsson Triples Profits in 4Q06 • Ericsson's Growing Emerging Market Success Should Leave Motorola Trailing Behind • Ericsson Buying Redback To Fend Off Cisco In IPTV Equipment • Ericsson Earnings Conference Call Transcript (later today)
Stocks/ETFs to watch: LM Ericsson (ERIC). Competitors: Alcatel-Lucent (ALU), Siemens (SI), Motorola (MOT), Nokia (NOK), Nortel (NT), Cisco (CSCO), NEC (NIPNY). ETF: Wireless HOLDRs (WMH)
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