Ericsson refuses to go outside the telecommunications equipment market
Ericsson has turned the plans of the conclusion of contracts with new clients that do not run on the telecommunications equipment market. The move is designed to help her focus on the sale of equipment for cellular networks to cut costs and stop the decline in the value of shares. It follows from the last report, for the year Ericsson quarterly revenue decreased by 11%, and taking into account changes in the exchange rate — and at all on 16%. Operating profit for the year the year before, amounting to 0.36 billion euros, was replaced by an operating loss of $ 1.28 billion euros.
From Ericsson is a major customer, purchasing telecommunications equipment, including Vodafone and Verizon, but the profit from these activities becomes less, since it is necessary to reduce prices under the pressure of competition in the face of Nokia and Huawei. For two years, shares of Ericsson fell by 30%.
In 2014, Ericsson has proclaimed a policy of diversification, intending by 2020 to obtain 25% of income from sources other than the sale of telecommunication equipment. At that time, their share in the income of the company was approximately equal to 10%.
However, the plan didn’t work. The company therefore recognized a rational return exclusively to the core business.