Telefonaktiebolaget LM Ericsson
What analysts say:
- Buy, sell, or waffle? According to Reuters estimates, 54 analysts cover Ericsson: 35 of them have a buy rating on the stock, along with 14 holds and five sellers. In our Motley Fool CAPS community, 126 users have cast their votes to make this a three-star stock (out of five stars).
- Revenues. The consensus forecast says that we'll see $7.11 billion on the top line this time, 19% above the year-ago total of $5.96 billion.
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Earnings. $0.64 per share would sate the cravings of the average analyst, up from the $0.49 per share reported last year.
What management says:
In the last earnings report, CEO Carl-Henric Svanberg shone the spotlight on Ericsson's multinational dominance:
Sales growth in the quarter was primarily driven by Western Europe, and large turnkey projects in Central and Eastern Europe, Middle East, Africa and Asia Pacific. Our capability in managing such projects around the world is a competitive advantage. ... Our commitment to operational excellence continues and operating expenses grew less than 3 percent versus a sales growth of 8 percent.
What management does:
The Sony
But phone network infrastructure equipment remains the company's rye bread and pickled herring. Read on to see how that segment is doing.
12/2005 |
3/2006 |
6/2006 |
9/2006 |
12/2006 |
3/2007 |
|
---|---|---|---|---|---|---|
Gross |
45.5% |
44.6% |
43.4% |
42.6% |
41.2% |
41.2% |
Operating |
21.6% |
20.8% |
19.9% |
20.9% |
18.7% |
19.3% |
Net |
16.0% |
15.2% |
14.6% |
14.8% |
14.8% |
15.2% |
YOY Growth |
12/2005 |
3/2006 |
6/2006 |
9/2006 |
12/2006 |
3/2007 |
---|---|---|---|---|---|---|
Revenue |
15.0% |
17.9% |
17.1% |
16.6% |
17.1% |
13.1% |
Earnings |
38.6% |
15.4% |
18.2% |
17.2% |
8.0% |
13.3% |
One Fool says:
Ericsson just signed its largest-ever contract, a two-year GSM equipment deal with Indian phone giant Bharti worth $2 billion. India is the world's fastest-growing cell phone market right now, and it stands to reason that Sony Ericsson handsets would follow the infrastructure investment there. Upgrading this network to 3G capability would be a simple matter of installing 3G base stations at the "soft switch" interchanges, according to Ericsson's head of Indian operations, Mats Granryd.
That's not all, though. Three Wieners (my own translation of the common Swedish term for Ericsson, "Tre Korvar") is negotiating a massive 3G deal with the other major Indian player, BSNL. That particular order will be shared with the Nokia
It's fun and games across the globe, and Ericsson is growing as long as somebody needs a simple phone network, or an upgrade to the old one. I don't see that need abating anytime soon, especially since phone users everywhere have started to develop a taste for data-intensive music and video services. Maybe it's time to take a serious look at Ericsson as an investment opportunity.
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Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure will help you find the road ahead.