Ericsson CEO Jan Frykhammar said the market for mobile infrastructure will decline 10 to 15 percent in 2016, and 2 to 6 percent in 2017.
The negative industry trends due to weaker demand for mobile broadband are expected to prevail short-term. “The company is adapting operations to lower business volumes to secure resilience and competitiveness,” Ericsson said ahead of its annual Investor Update event today in New York.
Ericsson will introduce a new financial reporting structure as of Q1 2017, based on the new company structure.
The company is reporting on its strategy implementation for faster business execution based on its new company structure with three segments: Networks, IT & Cloud, and Media. The new structure was implemented on July 1, 2016.
In 2015, Ericsson’s networks business has contributed 75 percent of sales with mid-teens operating margin, IT & Cloud 20 percent with break-even operating margin and Media the balance 5 percent with negative low-teens operating margin.
Ericsson said its strategy builds on efficiency and scale in its core business and investments in the new revenue base from its targeted growth areas. This will enable the company to secure leadership in an emerging broader 5G market.
In the networks business, the addressable market will be $100 billion in 2016, with -2 to 0 percent CAGR growth 2016-2018.
In IT & Cloud, the addressable market will be $100 billion in 2016, with 5 to 7 percent CAGR growth 2016-2018.
In Media, the addressable market will be $12 billion in 2016, with 9 to 11 percent CAGR growth 2016-2018.
Ericsson said the company’s total addressable market is expected to grow by 1 to 3 percent in 2016-2018.
