Ericsson management is cautiously optimistic about the company’s financial future. During the company’s Capital Markets Day with investors, CEO Börje Ekholm said that the company is seeing more traction with its product portfolio and that its investment in research and development, particularly around growth areas like 5G and IoT, are paying off.
Specifically, Ekholm said that the company expects its annual net sales to be in the realm of $23.4 billion to $24.4 billion in 2020, up from a previous forecast of $21.1 billion to $22.3 billion.
Ekholm told investors he also expects this growth to primarily come from the company’s networks division. However, the company will continue to invest in R&D in the networks area, which means that Ericsson expects its operating margin to remain in the 15 percent to 17 percent range.
Ekholm became CEO of Ericsson in January 2017, after serving as a board member for the infrastructure vendor. During his nearly two-year tenure as CEO he has dramatically trimmed Ericsson’s workforce. In 2017 the company said it had reduced its headcount by 17,000, a number that included contract workers as well as employees. Ekholm also was at the helm when Ericsson sold a majority stake of its media business to private equity firm One Equity Partners.
Ericsson has started to improve its financial performance during the past two quarters. In the third quarter the company reported $5.96 billion in net sales, which was a 9 percent year-over-year increase and an 8 percent increase over the second quarter.
On the technology side, Ericsson CTO Erik Ekudden provided investors with a high-level list of the key tech trends that he sees evolving. Ekudden said that he believes zero-touch networking will become a reality, which means networks will become more automated.
Ekudden also envisions the network becoming more critical where data is shared via a general connectivity platform from any device at any time.