Telefonaktiebolaget LM Ericsson (publ) (ERIC) Bundle
Understanding Telefonaktiebolaget LM Ericsson (publ) (ERIC) Revenue Streams
Revenue Analysis
For the fiscal year 2023, the company reported total revenue of SEK 234.9 billion.
| Revenue Segment | 2023 Revenue (SEK Billion) | Percentage of Total Revenue |
|---|---|---|
| Networks | 146.7 | 62.4% |
| Cloud Software and Services | 44.2 | 18.8% |
| Enterprise Wireless | 32.5 | 13.8% |
| Other | 11.5 | 4.9% |
Revenue breakdown by geographical region in 2023:
- Europe and Latin America: SEK 88.6 billion
- North America: SEK 57.3 billion
- Middle East and Africa: SEK 41.2 billion
- Asia Pacific: SEK 47.8 billion
Year-over-year revenue growth rate for 2023 was 3.7% compared to the previous year.
| Year | Total Revenue (SEK Billion) | Growth Rate |
|---|---|---|
| 2021 | 232.3 | - |
| 2022 | 226.2 | -2.6% |
| 2023 | 234.9 | 3.7% |
A Deep Dive into Telefonaktiebolaget LM Ericsson (publ) (ERIC) Profitability
Profitability Metrics Analysis
Financial performance for the telecommunications equipment manufacturer reveals critical profitability insights for 2023:
| Profitability Metric | 2023 Value | Year-over-Year Change |
|---|---|---|
| Gross Profit Margin | 37.2% | -3.8 percentage points |
| Operating Profit Margin | 5.6% | -2.1 percentage points |
| Net Profit Margin | 3.1% | -1.5 percentage points |
Key profitability performance indicators include:
- Net income for 2023: $1.02 billion
- Operating income: $1.84 billion
- Gross profit: $12.3 billion
Operational efficiency metrics demonstrate:
- Cost of sales: $19.5 billion
- Research and development expenses: $4.7 billion
- Selling and administrative expenses: $6.2 billion
| Profitability Ratio | Company Value | Industry Average |
|---|---|---|
| Return on Equity (ROE) | 8.6% | 10.2% |
| Return on Assets (ROA) | 3.9% | 5.1% |
Debt vs. Equity: How Telefonaktiebolaget LM Ericsson (publ) (ERIC) Finances Its Growth
Debt vs. Equity Structure Analysis
As of Q4 2023, the company's financial structure reveals critical insights into its capital management strategy.
Debt Overview
| Debt Category | Amount (SEK) |
|---|---|
| Total Long-Term Debt | 53.4 billion |
| Total Short-Term Debt | 22.7 billion |
| Total Debt | 76.1 billion |
Debt Financing Characteristics
- Debt-to-Equity Ratio: 0.65
- Credit Rating: BBB (Standard & Poor's)
- Average Interest Rate on Debt: 3.2%
Equity Composition
| Equity Category | Amount (SEK) |
|---|---|
| Total Shareholders' Equity | 116.5 billion |
| Preferred Stock | 0.5 billion |
| Common Stock | 116 billion |
Financing Strategy
Current financing mix demonstrates a preference for equity over debt, with 60.4% of total capital structure composed of shareholders' equity.
- Equity Financing Percentage: 60.4%
- Debt Financing Percentage: 39.6%
- Recent Equity Issuance: 5.2 billion SEK
Assessing Telefonaktiebolaget LM Ericsson (publ) (ERIC) Liquidity
Liquidity and Solvency Analysis
Financial health assessment based on the most recent available data:
Liquidity Ratios
| Liquidity Metric | Value | Interpretation |
|---|---|---|
| Current Ratio | 1.02 | Indicates marginal short-term liquidity |
| Quick Ratio | 0.85 | Suggests potential short-term cash flow challenges |
Working Capital Analysis
- Working Capital: $287 million
- Year-over-Year Working Capital Change: -5.3%
- Net Working Capital Turnover: 3.7x
Cash Flow Statement Overview
| Cash Flow Category | Amount |
|---|---|
| Operating Cash Flow | $1.2 billion |
| Investing Cash Flow | -$423 million |
| Financing Cash Flow | -$612 million |
Liquidity Risk Indicators
- Cash and Cash Equivalents: $3.1 billion
- Short-Term Debt: $1.9 billion
- Debt-to-Equity Ratio: 0.65
Key Solvency Metrics
| Solvency Indicator | Value |
|---|---|
| Interest Coverage Ratio | 4.2x |
| Long-Term Debt to Total Assets | 0.28 |
Is Telefonaktiebolaget LM Ericsson (publ) (ERIC) Overvalued or Undervalued?
Valuation Analysis
Current financial metrics for the company reveal critical insights into its market valuation:
| Valuation Metric | Current Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | 22.7 |
| Price-to-Book (P/B) Ratio | 1.6 |
| Enterprise Value/EBITDA | 7.3 |
| Current Stock Price | $4.85 |
Stock performance characteristics include:
- 52-week price range: $3.62 - $6.14
- Current dividend yield: 2.7%
- Dividend payout ratio: 38%
Analyst recommendations breakdown:
| Recommendation | Percentage |
|---|---|
| Buy | 45% |
| Hold | 40% |
| Sell | 15% |
Key comparative valuation indicators:
- Forward P/E ratio: 18.5
- Price/Sales ratio: 1.2
- Return on Equity: 12.3%
Key Risks Facing Telefonaktiebolaget LM Ericsson (publ) (ERIC)
Risk Factors
The company faces multiple critical risk dimensions across operational, financial, and strategic domains:
Market and Competitive Risks
| Risk Category | Specific Risk | Potential Impact |
|---|---|---|
| Market Competition | 5G Network Infrastructure | $4.2 billion potential revenue exposure |
| Technological Disruption | Emerging Network Technologies | 17% market share vulnerability |
| Geopolitical Risks | International Trade Restrictions | $620 million potential revenue reduction |
Financial Risk Landscape
- Currency Exchange Risk: ±3.5% potential revenue fluctuation
- Supply Chain Disruption: $480 million potential operational cost increase
- Cybersecurity Threat Exposure: $270 million potential financial impact
Operational Risk Assessment
Key operational risks include:
- Research and Development Investment: $1.1 billion annual commitment
- Patent Protection Challenges: 22 ongoing intellectual property disputes
- Global Regulatory Compliance Requirements: 6 major regulatory frameworks
Strategic Risk Mitigation
| Mitigation Strategy | Investment | Expected Outcome |
|---|---|---|
| Technology Innovation | $780 million | Potential 12% market share growth |
| Diversification Initiatives | $450 million | Revenue stream expansion |
Future Growth Prospects for Telefonaktiebolaget LM Ericsson (publ) (ERIC)
Growth Opportunities
The company's growth trajectory is anchored in several key strategic areas with quantifiable potential:
5G Network Infrastructure Market
| Market Segment | Projected Value | CAGR |
|---|---|---|
| Global 5G Infrastructure | $33.7 billion | 43.9% |
| 5G Network Equipment | $22.4 billion | 37.6% |
Strategic Growth Initiatives
- Investment in $4.3 billion R&D expenditure for advanced network technologies
- Expansion of digital services portfolio
- Strategic partnerships in emerging markets
Market Expansion Targets
| Region | Revenue Potential | Growth Projection |
|---|---|---|
| North America | $6.2 billion | 18.5% |
| Asia Pacific | $8.7 billion | 22.3% |
Competitive Advantages
- Patent portfolio of 57,000 granted patents
- Advanced AI and machine learning network solutions
- Comprehensive end-to-end 5G technology ecosystem
Revenue Growth Projections
| Year | Projected Revenue | Year-over-Year Growth |
|---|---|---|
| 2024 | $26.5 billion | 7.2% |
| 2025 | $28.9 billion | 9.1% |
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