Ericsson has now released both its Q4 and full year results for 2017 and the numbers don’t necessarily look good. Looking at the quarter by the numbers, the company reports a sales decrease by 12 percent and a year-over-year decline of 7 percent, which the company attributes to lower LTE sales in China. Meanwhile, although Ericsson’s hardware margins and software sales were reportedly stable, the company also notes that its operating profits for the quarter fell in at -$2.5 billion. Finally, cash flow from operations and free cash flow came in at around $1.4 billion and $1.8 billion, respectively.
Despite the general negativity of those figures, the network technologies company did manage to gain in terms of net cash from the previous year – finishing Q4 2017 with an increase from 2016 by just short of $444.4 million to land at approximately $4.4 billion. Unfortunately, the bulk of the remaining figures for the period also show something of a downward trend. Sales for the full year dropped by 10 percent with declines across the board for the company and operating income dropped to around -$4.8 billion. Cash flow from operations fell by nearly half from 2016 to around $1.2 billion but free cash flow for the entire year fell in at approximately $647.5 million. According to the official fiscal report, Ericsson’s losses primarily came as a result of write-downs to its assets. For those who may not be well-versed in economics, that effectively means that a substantial portion of the company’s assets and holdings lost value over the course of the quarter and the year. In Ericsson’s case, that was coupled with a decline in expected sales and gross margins which were stable, but which also fell year-over-year – causing the company to perform well below expectations. Meanwhile, according to company CEO Börje Ekholm, operating profits were adversely affected because of one-time line items, under-performing and unfulfilled network contracts, and seasonally expected declines in businesses.
Looking forward, the company has revealed plans to consolidate its media-related holdings and to further invest in its products. Those are areas in which Ekholm claims the business was able to stem off some of its losses. In the meantime, the company maintains that it holds a good position in terms of its 4G LTE portfolio and that it has placed itself in an advantageous position for the incoming 5G networks. That includes, Ekholm says, new contracts which have been added to its 5G-ready portfolio. Given those successes and that its adjusted gross margin specifically in networking rose 36 percent year-over-year, Ericsson says that it will be able to meet its targets to stabilize the company further over the course of 2018 and into 2019.
