Telecommunications giant Ericsson beats market expectations in 2015, with rising revenues in newly developed business lines, much lowered operational costs, and stable income streams from patents licensing deals. Meanwhile, the major telecom vendor sustained sales in its core business of networks, services and support solutions, although Ericsson has seen increasingly fiercer competition from China's Huawei Technologies and Nokia, which has just acquired and merged with Alcatel-Lucent.
Hans Vestberg, chief executive officer and president of Ericsson, told reporters in Sweden on Wednesday: "Our focus in 2016 will be put on the core business, targeted growth areas and cost and efficiency program. While market conditions remain challenging in parts of the world, Ericsson will work to capture business opportunities as more markets shift to 4G. At the same time Ericsson will work to extend our technology leadership in the emerging 5G market." Releasing its fourth quarter financial results report, Ericsson raked in 13.7 billion Swedish crowns of net profit in 2015, which rose 23.5 percent year-on-year, on a gross business turnover of 246.9 billion crowns. Net sales for the previous year were 228 billion crowns. The performance beats most analysts' expectations.
Operating income, excluding restructuring charges, increased to 26.8 billion crowns, with improvements in all business segments, the company said in a statement. The vendor reported a particularly rosy fourth quarter numbers, with operating margin hitting 15.1 percent compared to 9.3 percent a year ago. Its fourth quarter net income reached 7.0 billion crowns, rising 68 percent year on year, mainly thanks to the settling of a major patents dispute with Apple following long negotiations, and the resigning of an IPR cross-licensing deal with Huawei in late 2015. Commenting on its IPR policy, CEO Hans Vestberg said: "Ericsson's IPR strategy, to generate value from our investments in research and development, has been successful, and over the past five years, we have more than tripled our IPR licensing revenues. After the recent announcements of two important patent license agreements, we now have agreements with the majority of handset suppliers."