General presentation of the Ericsson Company:
The Ericsson group is a specialist in the design, production and sale of fixed and mobile communication devices. It mainly offers telephone and transmission network systems and equipment, as well as management and control services for networks and multimedia equipment.
With over 10 production sites worldwide, Ericsson mainly affects the European and Asian market, but also North America, the Middle East, Latin America and Sub-Saharan Africa.
Knowing Ericsson shares competition:
The Ericsson group, formerly specialized in mobile telephony terminals has since widely diversified its activities and products becoming one of the main equipment manufacturers of telecommunications technologies in the world. It therefore faces little competition but some large companies still threaten its market share. This is why it's essential to identify the companies competing with Ericsson before starting to speculate on the price of this asset.
- Cisco and Huawei: On the networking equipment and software market, the Ericsson group is currently number three in the world with 9% of the market share. Its two main competitors are Cisco and Huawei, which respectively hold 19% and 11% of the market.
- Other competitors: In the telecommunications equipment sector, Ericsson is in fifth place worldwide after Alcatel-Lucent, Allied Telesis, Avaya and Cisco but ahead of Huawei, Juniper, Nokia and ZTE.
The strategic alliances set up by the Ericsson group:
- Amazon: In 2016, Ericsson signed several strategic partnerships with a few large groups. First with Amazon and the opening of an Innovation Centre in Australia. The objective is to benefit from Amazon Web Service infrastructures in Cloud, NFV and SDN technologies.
- Intel: Ericsson signed a partnership that same year with Cisco, then with Intel in order to realise the first industrial 5G router.
- PSA: In 2017, the PSA group signed a partnership agreement with Orange and Ericsson as part of a technological experiment on 5G and its possible use in the automotive sector. It's aimed at using the evolution of 4G technology to 5G into the manufacture of connected vehicles such as with intelligent transport systems.
Introduction and stock quote of the Ericsson share:
The Ericsson share price is currently listed on the Nasdaq Main Market Large-cap OMX Nordic and has integrated the calculation of the FTSE Eurotop 100 stock market index.
Several phases have marked the development of this share over the past ten years. Charts show a first increase in May 2008 which ended reaching a high of € 12.06 in April 2015. Then, a slow bearish trend took over clearing the € 5 threshold in 2016.
Stock market data
- In 2017, the total market capitalization of Ericsson reached 21,196.52 Billion Euros.
- The number of securities issued by Ericsson and in circulation on the market is around 3,011,595,703.
- The Ericsson share price is currently listed on the NASDAQ Main Market Large-cap QMX Nordic Stockholm in Sweden.
- Ericsson is also part of the European FTSE 100 stock market index and is therefore one of the 100 leading companies in Europe with the largest capitalization.
- Ericsson shareholding as of October 30th 2019: Cevian Capital (9,14%), Investor (5,18%), Swedbank Robur Fonder (4,93%), Fidelity Management & Research (2,92%), The Vanguard Group (2,69%), AMF Pensionsförsäkring (2,47%), Norges Bank Investment Management (2,29%), Svenska Handelsbanken (2,08%), State Street Global Advisors (2,04%, Dodge & Cox (1,52%)
The Ericsson Company was created in 1878 and the same year became the largest supplier of devices in Scandinavia.
- In 2001, Ericsson created the Sony Ericsson company with the Sony Corporation, in the sector of mobile data terminals.
- In 2008, the group sold the PABX division to Aastra technologies in the amount of 70 million euros.
- In 2011, Ericsson sold its shares in Sony Ericsson for a billion euros.
- In 2012, the group bought the TNSF broadcasting service branch from Thomson Technicolor. It remains the world leader in mobile telecommunications infrastructure.
- In 2013, Ericsson bought Microsoft’s IPTV subsidiary for around $ 250 million.
- In 2014, Ericsson became the world's 3rd market share in the network equipment and software sector behind Cisco and Huawei.
- In 2015, Ericsson announced the cut of 2,200 jobs in Sweden.
- In 2015, Ericsson announced the acquisition of Envivio, a video compression specialist and contributor to the MPEG-4 standard for $ 125 million.
- At the end of 2016, Ericsson announced a drop in its net profit of around 26%, which fell to 1.6 billion krona or 169 million euros in one year. Faced with increasing competition, the group announced a restructuring and cost reduction plan with the cut of over 3,000 jobs.
The advantages and strengths of the Ericsson share as a stock market asset :
First of all, we can of course highlight as one of the Ericsson Group's greatest strengths its very high flexibility in terms of product supply. The company is able to adapt its production to rising or falling demand and thus take account of changing market requirements. The same applies to the management of commercial solutions, which is also very flexible according to needs.
Ericsson is also a highly qualified company when it comes to mobile systems technology. The solutions developed and marketed by the company are considered to be of high quality, which effectively strengthens the company's brand image and boosts sales worldwide.
Industry analysts have also highlighted Ericsson's strong ability to reduce operating costs where necessary and to protect margins. To this end, the group has implemented a strategy that has proven to be very effective, mainly aimed at achieving economies of scale. This has enabled it to maintain a good level of profitability to date.
We also appreciate the company's strong international presence. Indeed, Ericsson currently markets its products and solutions in more than 180 countries around the world. This geographical distribution of its sales on the different continents prevents it from being too exposed to one and the same economic sector.
Of course, the Ericsson Group does everything in its power to maintain its position among the market leaders, in particular by striving to remain a highly innovative and technologically advanced company. To this end, it invests a lot of money in research and development every year and succeeds in developing new innovative solutions on a frequent and regular basis.
Last but not least, the Ericsson Group's workforce is also a real strength of the company. Indeed, to date, the group has no less than 100,000 employees around the world, which once again enables it to respond effectively to market needs.
The disadvantages and weaknesses of the Ericsson share as a stock market asset :
If you're still wondering whether you should take a buy or sell position in the Ericsson share, the few arguments for the company's growth that we've just cited may encourage you to opt for a buy strategy. However, before you take a decision in this direction, you should also be aware that this company also has weak points that you should not overlook in your analyses. These are the two main weaknesses of the Ericsson Group at the moment:
First of all, from a purely financial point of view, stock market investors and shareholders are hesitant about this stock because of the results published by the Ericsson Group. Indeed, the company shows a high variability in operating results over the last few years. This lack of stability can of course cause the market great concern by reducing long-term visibility and thus have a negative influence on the price of this asset.
Finally, it should also be noted that the Ericsson Group presents significant risks with regard to its relationship with its customers. This concerns in particular the credits granted to some of these customers and therefore a longer time to achieve the expected results following orders. This could also worry traders about the risk of non-payment of some important invoices.