Lehman Brothers analysts Tim Luke and Stuart Jeffrey sent a Q4 update on Ericsson (ticker: ERICY) as a note to clients, where they lowered their current quarter revenue estimates for the telecom equipment and services company. Key excerpts and ERICY chart:
We are reducing our 4Q05 revenue estimates to reflect softer seasonal trends in China and Western Europe but our CY06 estimates are unchanged and at present we are maintaining our 1OW ['overweight'] rating...
We believe that Ericsson continues to see healthy growth across in infrastructure sales the US, SE Asia and most of its developing country markets; however, we consider that China and W Europe may be trending below normal seasonality. In China (at 7-8%sales) we believe that uncertainty over the timing of 3G licenses and the structure of the carriers is leading to lower than expected investment levels in 2H06. In Western Europe (at 26-28% of sales), we believe that after strong catch up spending in 2H04 (+18% YoY in 4Q04) comparisons are more challenging with carriers focused on capex levels.
But there was also some good news for Ericsson recently in two emerging Eastern European markets: Ericsson chosen by BITE Group as supplier for 2G and 3G mobile systems in Lithuania and Latvia
ERICY 1-yr chart: