On November 8, Ericsson (NASDAQ: ERIC) will hold its Capital Markets Day 2018 in New York. The company will give an overview of its turnaround, strategy, and plans for future growth as well as details about its business segments and market trends.
Over the past seven quarters, focus has been on simplifying and stabilizing the business, including stopping the topline decline. Accelerated cost reduction activities and contract reviews have been implemented. There is good traction in the ongoing portfolio review. Moreover, the company's increased investments in R&D for future growth combined with efficient cost control has proven successful with improved profitability as a result.
B rje Ekholm, President and CEO, says: With our focused strategy we have created a strong foundation of stability and profitability. Our strengthened portfolio and competitive cost structure have enabled us to grow in the third quarter 2018, for the first time since 2014, on a constant currency basis, despite headwind from exited contracts and businesses. As the industry moves to 5G and IoT we are now preparing to take the next step to generate profitable growth in a selective and disciplined way.
Group profitability target and net sales ambition 2020
The ambition for net sales is increased to SEK 210 220 (190-200) b. by 2020, mainly driven by Networks. Of the increase in the sales ambition, SEK 5 b. is explained by currency and SEK 2 b. is explained by the inclusion of Red Bee Media, previously not included in the sales ambition.
In Networks, increased investments in R&D for technology and cost leadership will continue. Growth is expected to come from a stronger market, selective market shares gains, and expansion of the product portfolio into close adjacent markets. In 2019, investments in 5G trials will continue. The operating margin target for 2020 is unchanged at 15% 17%.
In Digital Services, the top priority is returning to profitability. Continued cost reductions and efficiency improvements will contribute to reaching the target of a low single digit operating margin by 2020. Investments in a 5G-ready and cloud-native product portfolio continue. There is a strong market demand for the new portfolio driven by virtualization and 5G acceleration. At the same time, the legacy product sales decline faster than the new portfolio uptake. The lower net sales ambition for the segment is fully explained by the internal transfer of a business line to Managed Services.
In Managed Services, where a turnaround has been completed, focus is shifting to further improving profitability through investments in automation and Artificial Intelligence. Consequently, the operating margin target 2020 is increased to 5% 8%.
In Segment Emerging Business and Other focus is on establishing new businesses for organic growth. The strategy is to capture new revenues through rapid and disciplined innovation building on 5G and IoT. For the current business portfolio, the target of break-even by 2020 is unchanged. However, in case of attractive new business opportunities, we may decide to scale up investments. We will manage emerging business initiatives for growth, based on positive NPV case-by-case and within 2022 Group targets.
Long-term profitability
As previously communicated the long-term profitability target for the Group is an operating margin of more than 12% excluding restructuring. While the target level remains unchanged, the timing is now set to 2022 at the latest. Operating margin targets per segment for 2022 are found in the table below:
Financial targets and sales ambitions
(CMD 2017 numbers in brackets, when changed)
SEK b. Networks Digital Services Managed Services Emerging Business and Other Group
2020 Net sales ambition 141 145(128 - 134) 41 - 43 23 - 25 5 - 7 210 - 220
2020 Operating margins 15% - 17% Low single digit 5% - 8%(4% - 6%) Break-even(current business) >10%
Operating margin by 2022, at the latest 15% - 17% 10% - 12% 8% - 10% - >12%
Note: All financial targets are based on USD/SEK at 8.70. Operating margin targets are all excluding restructuring charges.
Market development
Ericsson's total addressable market is expected to grow between 2% 3% CAGR from 2018 to 2022, broken down as follows: Radio Access Network 1% 3%, Managed Services 2% - 4%, and Digital Services 1% 4%.
Planning assumptions for all key segments are based on external sources.
Planning assumptions Q4 2018
The planning assumptions as stated in the third quarter report for 2018 remain. However, following the announcement to accelerate edge computing through a partnership with Limelight, we plan to reset Ericsson EdgeGravity, formerly known as Ericsson UDN, allowing for a leaner set-up of content delivery. These actions are expected to generate annual cost savings of SEK 0.2 b. starting from 2019. Related to this, Q4 2018 will be negatively impacted by SEK -0.5 b., of which SEK -0.2 b. of restructuring charges impacts cashflow.
Speakers and details of the event
President and CEO B rje Ekholm and CFO Carl Mellander, will be joined by members of the companys Executive Team. The speakers include Erik Ekudden, CTO, Fredrik Jejdling, Executive Vice President and Head of Business Area Networks, Jan Karlsson, Head of Business Area Digital Services, Peter Laurin, Head of Business Area Managed Services, and sa Tamsons, Head of Business Area Technologies and New Businesses, Niklas Heuveldop, Head of Market Area North America, Arun Bansal, Head of Market Area Europe and Latin America, and Chris Houghton, Head of Market Area North East Asia.
Ericssons Capital Markets Day event can be accessed via the Ericsson website https://www.ericsson.com/en/investors/events-and-presentations/CMD2018. Presentation materials can also be downloaded from the website once the webcast has started.
NOTES
Most recent headlines
05/01/2027
Worlds first 802.15.4ab-UWB chip verified by Calterah and Rohde & Schwarz to be ...
04/08/2026
Dalet, a leading technology and service provider for media-rich organizations, t...
04/07/2026
April 7 2026, 19:00 (PDT) Detective Conan: Fallen Angel of the Highway Opens in...
01/06/2026
January 6 2026, 05:30 (PST) Dolby Sets the New Standard for Premium Entertainment at CES 2026
Throughout the week, Dolby brings to life the latest innovatio...
06/05/2026
Gravity Media Chief RF Communications Engineer Glenn Willems uses Wisycom RF over Fiber and wireless solutions across major cycling events and international mar...
06/05/2026
A Sennheiser Spectera module is now available in Bitfocus Companion and Buttons, enabling direct integration of Spectera with the two software platforms. The mo...
06/05/2026
Ted Turner, the visionary media entrepreneur whose appetite for disruption helpe...
06/05/2026
Peacock is going all-in on the beautiful game - streaming all 104 FIFA World Cup...
06/05/2026
New pricing tiers for vocal/dialogue restoration tool
NoiseWorks Audio's AI-powered vocal and dialogue processing plug-in is now available in three diff...
06/05/2026
Popular mixing & routing software overhauled
Following a recent public beta test, RME have launched the final release version of the powerful mixing and rou...
06/05/2026
New SOS Video Feature
Focusrites ISA C8X is a milestone product that brings together the companys analogue heritage and their expertise in digital audio. Yo...
06/05/2026
Polands Miecznik-class frigates are part of the largest contract in Polish shipbuilding history. (Image Credit: PGZ Stocznia Wojenna)...
06/05/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
06/05/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
06/05/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
06/05/2026
Riedel Communications today announced the expansion of its leadership structure as part of a strategic initiative to strengthen both its operational management ...
06/05/2026
For nearly three decades, Veteran Production Sound Mixer and Five-time Emmy Award Winner Dirk Sciarrotta has helped define the sonic identity of the long-runnin...
06/05/2026
ZEISS CinCraft LensCore: Cinema Lens Looks for Compositing
Brie Clayton May 6, 2026
0 Comments
ZEISS announces the launch of CinCraft LensCore, a nove...
06/05/2026
Wisycom Solves Extreme RF Challenges Across Miles of Live Action for Gravity Med...
06/05/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
06/05/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
06/05/2026
Narrative Entertainment has partnered with Encompass to deliver high-quality subtitling of its Great! network content using the Altitude Intelligence AI assiste...
06/05/2026
SipRadius, widely recognized for making content processing and connectivity secure and seamless, is proud to launch a dramatic new approach to AI content creati...
06/05/2026
When the broadband and media industry gathers at ANGA COM in Cologne from May 19 to 21, Big Blue Marble will be at the forefront. The international broadcast an...
06/05/2026
Cinegy GmbH, a leading developer of software-defined television technology, is proud to exhibit at MPTS for the first time. Visitors to the stand will discover ...
06/05/2026
Val Jeanty Receives 2026 Doris Duke Artist Award Jeanty, a composer, percussionist, and turntablist, is the fourth Berklee recipient of the prestigious award ...
06/05/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
06/05/2026
Share
Copy link
Facebook
X
Linkedin
Bluesky
Email...
06/05/2026
When live cycling races and international marathons stretch for miles across cities and countryside, there is no margin for RF failure in live broadcast. As Chi...
06/05/2026
Oberkochen/Germany, May 5, 2026
ZEISS announces the launch of CinCraft LensCore, a novel solution for creating physically based cinematic lens looks for visual...
06/05/2026
Wednesday 6 May 2026
Sky commissions feature documentary to mark 10th anniversa...
06/05/2026
Wednesday 6 May 2026
Sky and Formula 1 agree long-term partnership across UK, Ireland and Italy
Sky in the UK & Ireland to remain the home of Formula 1 until ...
06/05/2026
Sky Zero Footprint Fund-backed TV campaign launches nationwide, supported by new...
06/05/2026
Wuppertal May 6, 2026
Riedel Expands Leadership Structure, Appoints Marc Engro...
06/05/2026
SAN JOSE, Calif. - May 6, 2026 - Harmonic (NASDAQ: HLIT) today announced its latest broadband innovations for ANGA COM 2026, highlighting its vision for a new e...
06/05/2026
Statement from Rupert Murdoch, Chairman Emeritus, Fox Corporation on Ted Turner&...
06/05/2026
Friday 8 May on RT One and RT Player
Meet the NSPCA team caring for and protecting animals in need in this six-part series
Fly on the wall, six-part series...
06/05/2026
The race to build the world's most powerful AI factories demands networking ...
06/05/2026
How changes to proteins can alter drug interactions for new precision therapies Scripps Research team maps how chemical modifications to proteins affect drug bi...
05/05/2026
Experts from the world of academia, tech, business, politics and media convened for a Thomson Talks at the Cambridge Disinformation Summit in April. It's th...
05/05/2026
Three phones were hardwired for power and transmission to the truck; camera feat...
05/05/2026
The creative studio behind campaigns for the NBA, Fanatics Sportsbook & Casino, ...
05/05/2026
Nielsen has announced results from a co-viewing pilot program covering February&...
05/05/2026
viztrick AiDi, an on-device AI solution developed by Nippon TV, delivered global...
05/05/2026
ARRI has announced Omnibar, a battery-powered, IP65-rated multi-color LED linear...
05/05/2026
Imagine Communications has announced that France T l visions is the first broadc...
05/05/2026
The Women's National Basketball Association (WNBA) and Bell Media today announced a multiyear agreement to broadcast and stream WNBA games in Canada beginni...
05/05/2026
SVG is proud to announce Warner Bros. Discovery's Techwood Studios in Atlant...
05/05/2026
With no operator required, AutoMic workflow automates talent identification on U...
On November 8, Ericsson (NASDAQ: ERIC) will hold its Capital Markets Day 2018 in New York. The company will give an overview of its turnaround, strategy, and plans for future growth as well as details about its business segments and market trends.
