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What Analysts Expect from Ericsson in Fiscal 2018

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Mar. 7 2018, Published 2:59 p.m. ET

Ericsson had a difficult fiscal 2017

In the table below, you can see that Ericsson’s (ERIC) revenue fell almost 10% YoY (year-over-year) in fiscal 2017 to 201.3 billion Swedish kroner compared to 222.6 billion Swedish kroner in fiscal 2016. Operating income also fell significantly to -38.1 billion Swedish kroner in fiscal 2017 from 6.3 billion Swedish kroner in fiscal 2016. Revenue in 2017 was impacted by a reduction in LTE (Long-Term Evolution) investments in Mainland China and lower network sales in Vietnam, India, and Indonesia. Ericsson exited its Managed Services contract in India (INDA) in the previous quarter.

Ericsson also saw a revenue decline in emerging markets (EEM) such as Mexico, which it attributed to projected timing. However, revenue from Brazil rose in 4Q17. Ericsson was also impacted by a continued weak macro environment in the Middle East and Africa.

Ericsson’s CEO Börje Ekholm stated, “2017 was a tough year. We started to execute on our focused strategy and we laid the foundation for achieving our financial targets.”

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Revenue estimated to rise marginally in fiscal 2018

Wall Street analysts have estimated Ericsson’s revenue to rise 1.5% YoY to $5.4 billion in 1Q18, 2.3% YoY to $5.8 billion in 2Q18, and 0.9% YoY to $23.8 billion in fiscal 2018. However, analysts expect its non-GAAP (generally accepted accounting principles) EPS (earnings per share) to fall from $0.02 in 1Q17 to -$0.03 in 1Q18. EPS is also projected to fall from $0.17 in fiscal 2017 to $0.08 in fiscal 2018.

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