Ericsson will highlight its growing market share and reiterate its financial targets at a Capital Markets day with investors, the company said. Ericsson estimates its market share in mobile infrastructure has grown from 32 percent in May 2011 to 36 percent today, making it more than twice the size of the second-largest player in the market. The company is maintaining its short-term outlook, with the weak economic climate expected to lead to cautious operator spending. The business mix will shift from the third quarter, with more network modernization and coverage projects than capacity projects, the company expects. The gross margin will come under pressure in Q4 due to more network modernisation projects in Europe and more services revenue. However, the fundamentals for the industry remain solid, and Ericsson expects to continue to profit from the expansion in mobile broadband coverage. Only 35 percent of the world's population has WCDMA/HSPA coverage, and this number is expected to grow to 80 percent in 2016. In the same time period, population coverage of LTE will increase from 2 to 35 percent, Ericsson predicts. After the sale of its stake in Sony Ericsson, the company also expects patents and licensing to be a major source of revenue growth. With 27,000 patents covering a wide range of technologies, Ericsson is a net receiver of royalties and has some 90 license agreements. The company targets growing its IPR revenues beyond the SEK 4.6 billion generated in 2010.
Presentation at the Capital Markets day will include CFO Jan Frykhammar on the rationale for Ericsson to maintain a strong financial position and discuss the company's capital targets. The latter are unchanged, with sales outstanding of less than 90 days, inventory of less than 65 days, payable days of more than 60 days, and a cash conversion target of above 70 percent., Johan Wibergh, head of business unit Networks, will describe the estimated market sizes with their respective CAGR for key network equipment markets in 2010-15. For the 3GPP radio access network market, the market is estimated to grow from USD 20 billion to USD 33 billion in 2015 with a CAGR of 11 percent. 3GPP core is estimated to grow from USD 5 billion to USD 7 billion, with a CAGR of 7 percent. CDMA radio access network and core is estimated to decline from USD 9 billion to USD 4 billion, a CAGR of minus 15 percent. Microwave is estimated to grow from USD 5 billion to USD 6 billion, at a CAGR of 4 percent. IP Edge is estimated to grow from USD 6 billion to USD 9 billion, a CAGR of 8 percent. Opto Area is estimated to grow from USD 13 billion to USD 16 billion, with a CAGR 4 percent.
Wibergh will also talk about the success of the company's multi-standard radio base station RBS 6000, which by the end of the year will account for more than 95 percent of Ericsson's total RBS supply. Rima Qureshi, head of business unit CDMA Mobile Systems, will explain how operators' CDMA spending will be impacted by LTE and the speed of transition to LTE. Ericsson said it will work closely with its customer to manage the eventual decline of CDMA. Magnus Mandersson, head of business unit Global Services, will comment on Ericsson's leading services position. With an estimated 11 percent share in a highly fragmented telecom services market, Ericsson is 40 percent larger than the closest competitor. Per Borgklint, head of business unit Multimedia, will talk about the OSS/BSS business being a key growth area for Ericsson.
