Ericsson (ERIC) CEO Hans Vestberg says he has no plans to leave the company, dispelling rumors that he was on the short list of candidates to replace Steve Ballmer at Microsoft. That news along with the company’s guidance regarding stronger growth in Europe helped boost Ericsson’s stock price today even though the company missed analysts’ earnings estimates.
The world’s largest telecom equipment maker reported operating income of 9.1 billion krona ($1.4 billion) before interest and taxes, compared to 4.8 billion krona during the same period a year before, when earnings were hurt by the write-off of Ericsson’s interest in ST-Ericsson. Analysts polled by Reuters were expecting a 9.9 billion krona operating profit, on average. Gross margin grew to 37.1% in 4Q13, up from 31.1% in 4Q12. Sales came in at 67 billion krona (10.3 billion).
Ericsson’s earnings were helped by its recent patent settlement with Samsung, which added 4.2 billion krona ($653 million) to its fourth quarter sales, and 3.3 billion krona ($513 million) to its net income.
Vestberg said the company’s sales came under pressure last year, citing “two large mobile broadband coverage projects, which peaked in North America in the first half of 2013 and the impact from reduced activity in Japan.” He noted that sales in China had improved during the quarter as part of ongoing mobile broadband projects. China’s LTE tenders are underway, and two major operators in the region have already chosen Ericsson as their vendor.
The CEO also looked closer to home for growth in the company’s future. “Over time, we expect the telecom industry in Europe to improve driven by macroeconomic development and a recent investment announcement made by one of the large operators,” he said.
While Vestberg didn’t mention names, Vodafone, the second largest mobile operator in the world, recently announced it would spend 7 billion pounds ($11.6 billion) to increase its network coverage and speed in Europe. Vodafone is a well-known client of Ericsson’s.
