Ericsson on Tuesday reported flat fourth quarter revenue growth as slowing LTE network deployments in the U.S. offset strong perf ormances in other regions.
The Swedish equipment maker generated net sales of 68 billion kronor (€7.3 billion) in the three months to 31 December, up 1% on last year. Its networks division generated sales of SEK34.1 billion, down from SEK34.8 billion a year ago, while sales at its services division increased 10% to SEK29.8 billion.
"Strong sales growth in the Middle East, Europe and Asia was offset by a continued decline in North America," said Ericsson chief executive Hans Vestberg, in a statement.
Indeed, fourth quarter sales at Ericsson’s North America segment – the company’s biggest single region – fell 5% on-year to SEK13.1 billion (€1.4 billion).
U.S. telcos are concentrating on capacity upgrades rather than coverage, and are focused on cash flow optimisation in order to fund acquisitions and participation in spectrum auctions, he explained.
"We anticipate the North American mobile broadband business to remain slow in the short-term," he said.
Meanwhile, Ericsson’s operating income fell 30% on-year to SEK6.3 billion (€673.4 million), and its gross margin narrowed slightly to 36.6% from 37.1%. Fourth quarter net income fell 35% to SEK4.2 billion, driven by higher expenses related to increased R&D spending on what Ericsson referred to as "targeted areas".
In November, the company announced it will cut jobs as part of a broader plan to save €972 million by 2017. On Tuesday, Ericsson said it expects its cost-cutting drive to result in restructuring charges of between SEK3 billion and SEK4 billion in 2015.
Vestberg said the cost reduction plan is progressing, and that Ericsson "continues to proactively identify efficiency opportunities in the company."
