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Ericsson CEO: Co To Continue Gaining Market Share In 2005
STOCKHOLM -(Dow Jones)- Telefon AB LM Ericsson (ERICY) is likely to continue gaining market share in 2005 as its global presence and strong customer relationships pay off, Chief Executive Carl-Henric Svanberg said Friday.
Svanberg said Ericsson gained about two to three percentage points in global market share in 2004, from a share of around 30% in 2003.
"We maybe able to redo that trick" in 2005, said Svanberg at a news conference in Stockholm.
Ericsson is sticking to its outlook of slight growth for the total global mobile systems market in 2005.
Svanberg said the company's own growth will be driven by gains in market share, but he warned that high sales growth in the second and third quarter of 2004 make the comparables difficult for the coming quarters of 2005.
Ericsson's sales in Europe, its largest and fastest growing region in the first quarter, grew 26% over that period.
"The growth in Europe will come down," said Svanberg.
He also said growth in China, which was the weak in the first quarter, is expected to pick up again in the second quarter.
Declining sales in North America are likely to reverse towards the end of the year whenU.S.-based Cingular Wireless (CIW.XX) starts rolling out a new third-generation network, using Ericsson technology among others.
"The big volumes will come in 2006," Svanberg said about the Cingular rollout.
Speaking on the sustainability of operating margins ahead, Chief Financial Officer Karl-Henrik Sundstroem said they are more likely to come down than to go up in the next 18-24 months.
Ericsson had an operating margin of 21% in the first quarter.
Ericsson reported margins higher than analysts had expected in the first quarter, driven by a relatively high share of software sales compared with hardware. Software carries higher margins.
Sundstroem said, over time, the share of software should continue to increase, but in the shorter term that share may vary from quarter to quarter."
Posted to the site on 22nd April 2005