When Might Ericsson Return to Revenue and Profitability Growth?



Revenue expected to fall 7.5% in fiscal 2017

Analysts expect Ericsson’s (ERIC) revenue to fall 7.5% YoY (year-over-year) to $24.1 billion in fiscal 2017 compared to $26.1 billion in fiscal 2016. Revenue is also expected to fall in fiscal 2018 by 4.1% YoY to $23.1 billion. Its non-GAAP (generally accepted accounting principles) EPS (earnings per share) is estimated to fall 64.0% YoY in 2017 to $0.11.

Analysts expect Ericsson’s net margin to be -3.9% with an operating margin of -0.50% in 2017. It had a net margin of 0.77% with an operating margin of 7.4% in 2016. Profit margins are expected to rise in 2018 and 2019 despite a YoY fall in revenue. While analysts expect Ericsson’s revenue to fall 3.5% in 2018, its net margin is expected to rise to 2.2% with an operating margin of 6.0%.

Ericsson’s operating margin and net margin are expected to rise to 7.8% and 4.5%, respectively, in 2019 despite a fall in revenue of 0.50% YoY.

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Operating margin was 11.4% in 2015

In 2015, Ericsson’s operating margin was 11.4%, and its net margin was 5.5%, which is the highest profit margins since 2011. Revenue then fell almost 10.0% YoY in 2016 due to lower demand from developed markets and a difficult macro environment, which negatively impacted its profit margins.

This year, Ericsson is expected to post a net loss despite its efforts to cut costs.


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