European telecom vendors reported strong earnings based largely on increasing sales of wireless equipment.
L.M. Ericsson posted $1.1 billion in net income for the fourth quarter, a 52-percent increase from the $738 million the company reported for the same quarter of 2004. “We have concluded another good year with strong sales, earnings and cash flow,” said Carl-Henric Svanberg, president and chief executive officer at Ericsson.
The company said sales climbed 16 percent to $6 billion during the fourth quarter, compared with $5.2 billion during the fourth quarter of 2004. Ericsson added that sales were especially strong in both North and South America.
The results were in line with the company’s forecast as well as that of most telecom analysts. The company’s stock was trading up $1.25 per share on the news at $36.32 per share.
Looking forward, Svanberg stated, “Our strong position in both services and infrastructure expands the growth potential of our business. The strong W-CDMA/HSDPA development continues. The higher HSDPA transmission speeds make a dramatic difference to the user experiences and we expect most W-CDMA operators to launch HSDPA before year-end 2006.”
In addition, Svanberg noted, “Convergence and next generation IP networks continue to be key development areas for the industry. The upgrade to fixed and mobile broadband is accelerating traffic in the world’s networks.”
Meanwhile, on the heels of a 61-percent increase in yearly net income from 2004 to 2005, Alcatel Corp. is proposing a dividend payout to its investors for the first time in four years.
The company reported 2005 net income of $1.12 billion on revenues of $15.85 billion, a marked improvement from 2004’s net income of $694 million with revenues of $14.76 billion.
“By mid-year 2005, we saw a turnaround in our wireline business due to the success of our triple play strategy coupled with a breakthrough in our IP carrier data solutions,” stated Serge Tchuruk, chairman and CEO of Alcatel.
Strong fourth-quarter results in particular helped the company’s financials. Alcatel posted net income of $415 million from revenues of $4.93 billion for the quarter, whereas the company posted just $8.5 million net income in the same quarter a year ago.
“In addition, we registered continued expansion in our wireless business fueled by our radio multi-standard product strategy, which is well aligned with market trends, and a very efficient (research and development) program. In 2005, we grew our carrier business by over 10 percent, outpacing the market growth.”
Tchuruk said the dividend payment of 19 cents per share would be proposed at the company’s annual shareholders meeting scheduled for June 1.
“We anticipate that the carrier market will continue to grow in the mid single digit range for the full year 2006,” noted Tchuruk.
Wall Street reacted favorably to the earnings report, boosting Alcatel’s stock up 42 cents to $14.07 per share in trading.
