Foreign media: resurgence dilemma or boost Ericsson and NOKIA

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 Foreign media: resurgence dilemma or boost Ericsson and NOKIA


ZTE has seized the market share of Ericsson and NOKIA in Europe and America. Last year, ZTEs growth rate in these markets was four times that of its domestic market, which dragged down the pricing and revenue growth of Ericsson and NOKIA. But now, ZTE is being imposed on a potentially destructive export ban for up to 7 years. It has not yet announced how it will respond to the threat of us cutting off its supply chain. Ericsson and NOKIA will announce quarterly results on Friday and Thursday respectively, with the focus on upgrading the next generation of 5G networks. Countries are expected to start upgrading the next generation of 5G networks in 2018 or 2019, thus ending the 3 year to 4 year drought period of network equipment spending. At the same time, ZTE postponed its quarterly performance report originally scheduled for Thursday. Ericssons share price has risen 3% since April of this year, and NOKIAs stock price has risen 6%. BengtNordstrom, head of Northstream, a Swedish telecommunications consultancy, says ZTE may take months to find alternative suppliers and redesign its products, including optical and mobile devices. This is a very serious setback for ZTE. Ericsson and NOKIA are still facing a tough year, regardless of whether the U. S. business department prohibits American companies from providing components to ZTE, as telecom operators strictly control capital spending on network equipment, leading to weak market demand as a whole. In the global mobile network equipment market, the three giants dominate: the first place is China HUAWEI, Ericsson and NOKIA are following. To complicate matters, HUAWEI and NOKIA are gaining more revenue from other telecom businesses. The three companies face competition from ZTE and Samsung Electronics, which are late in the network equipment market, as well as more and more competitors focusing on software and services. Ericsson and NOKIAs quarterly earnings report may show only signs of weak recovery, even though their prospects seem to be brighter. No one on the planet is willing to go bankrupt for the 5G network, and its even lower when the business opportunities are still lacking in the 5G network, Stephen Tilaar (StephaneTeral), an analyst at IHSMarkit mobile devices, a market research agency, said to the Reuters. He warned that even if 5G technology might peak at some point in the next 10 years, the capital expenditure of network equipment may never return to the peak level created by the 4G network in 2015. According to UBS analysts, Ericsson and NOKIA are still under pressure in 2018, even though they already have the hope of achieving steady growth in 2019. The analyst also said NOKIA behaved better than Ericsson, and there was still much work to be done to make the price of the equipment contract more reasonable in the field. In Sweden, Ericsson has taken comprehensive cost cutting measures and has made a big management reform, focusing on profit rather than growth. Ericsson has found signs of recovery in several key markets, but it warns that it has more work to do in order to achieve its promised profit improvement targets in 2020. Reuters surveys show that analysts expect Ericssons first quarter revenue to fall 9% year on year, of which revenue from major network equipment businesses will fall by 11% year on year. NOKIA has said it expects its performance to hit the bottom of the year and to return to profits by 2020, encouraging investors who are frustrated by a general decline in global network spending and a setback in merger integration last year. Most analysts believe that NOKIAs recovery is faster than Ericsson, which is why NOKIAs share price can rise 22% so far this year, while Ericssons share price is up only 1%. Gary Pauline, a NorthernTrust analyst at investment bank, believes that NOKIA is a particularly safe bet in the volatile technology market. He classifies it as the fallen angel - a cheap stock, which has suffered a setback but is improving, and is ready to show its potential profitability once its short-term problems are resolved. By contrast, analysts at CreditSuisse, an investment bank, said the stock markets expectations for Ericsson were still too high. Ericsson says the market is underperforming as a result of the implementation risks of the companys ongoing restructuring and the less expected earnings of the 5G network. CevianCapital, the Swedish investment fund, said it was betting that Ericsson would raise profits by improving efficiency and simplifying its operations, rather than expected to achieve a significant growth in the 5G network in the next 10 years. When the 5G network comes, Ericsson will further enhance its growth and profitability when the 5G network comes, said CevianCapital management partner ChristerGardell. As of February this year, the company owns 8.5% of Ericsson. (Liu Chun) source: NetEase science and technology report editor: Bai Xin _NT4464 CevianCapital, the Swedish investment fund, said it was betting that Ericsson would raise profits by improving efficiency and simplifying its operations, rather than expected to achieve a significant growth in the 5G network in the next 10 years. (Liu Chun)