Ericsson Sees Radio Access Market Contract

Ericsson forecast the radio access network (RAN) equipment market will decline by 2% for full-year 2018, but will achieve a 2% compound annual growth rate for the period between 2017 and 2022. "In 2018, the Chinese market is expected to decline due to reduced LTE investments, while there is positive momentum in North America," Ericsson added.

Ericsson reported a 1% year-on-year fall in sales for the second quarter on an organic basis to 49.8 billion Swedish krona (5.6 billion US dollars). "We have good market traction in networks, with a sales growth of 2%, particularly in North America where all major operators are preparing for 5G," Ericsson said. Source: Ericsson statement 

Netflix Reports 130 Million Members

Netflix forecast that revenues will increase by 34% year-on-year in the current quarter, following a rise of 40% in the second quarter to 3.9 billion US dollars. The company reported that streaming revenue rose 43%, driven by a 26% increase in average paid memberships and a 14% rise in average selling prices.

Netflix said: "We had a strong, but not stellar, Q2, ending with 130 million memberships. Membership growth was 5.2 million, the same as Q2 last year, but lower than our 6.2 million forecast. .. we are starting to lead artistically in some categories, with our creators earning enough Emmy nominations this year to collectively break HBO’s amazing 17-year run." source: Netflix statement

Global Services Drags Down BT

BT Group reported a 1% fall in underlying revenue for the year to March 31st to 23.7 billion pounds (26.9 billion euros) and forecast a 2% fall for the year to March 31st, 2019.

The London-based company said the 3% growth in its consumer businesses was more than offset by decline in its enterprise divisions. "The main contributor to enterprise revenue decline was Global Services whose reported revenue declined 9% due to ongoing challenging market conditions and a reduction in IP Exchange volumes and equipment sales in line with our strategy to reduce low margin business."

Yet BT plans to increase capital expenditure from 3.5 billion British pounds in the past financial year to 3.7 billion pounds in this year. source: BT statement

iPhone X Lifts Apple Revenue

Apple forecast its revenue in the current quarter will reach between 51.5 billion and 53.5 billion US dollars, which would represent a year-on-year increase of between 12% and 18%.

For the quarter ending March 31, revenue rose 16% to 61.1 billion dollars, fuelled primarily by a 14% rise in iPhone revenues, even though shipments rose just 3%. Some of the difference is due to the high price of the latest model, the iPhone X, and Apple may also have benefitted from exchange rate movements.

Tim Cook, Apple’s CEO, said. “Customers chose iPhone X more than any other iPhone each week in the March quarter, just as they did following its launch in the December quarter. We also grew revenue in all of our geographic segments, with over 20% growth in Greater China and Japan.” Service revenue, which includes revenue from digital content and services, AppleCare, Apple Pay and licensing, rose 31% to 9.2 billion dollars. source: Apple statement

Amazon Prime Accelerates

Amazon forecast net sales will grow between 34% and 42% year-on-year in the current quarter to between 51 billion and 54 billion US dollars, boosted by a favourable impact of approximately 1.2 billion dollars or 320 basis points from foreign exchange rates.

In the first quarter of 2018, Amazon increased sales 39% year-on-year on an constant currency basis to 51 billion dollars in the first quarter. Amazon Web Services (AWS), the cloud computing business, generated a 49% increase in sales on a reported basis.

In a letter to shareholders, CEO Jeff Bezos revealed Amazon Prime now has more than 100 million paid members globally, 13 years after it was first launched. "In 2017 Amazon shipped more than five billion items with Prime worldwide, and more new members joined Prime than in any previous year – both worldwide and in the U.S.," he added. "Tens of thousands of customers are also using a broad range of AWS machine learning services, with active users increasing more than 250% in the last year, spurred by the broad adoption of Amazon SageMaker."

Bezos also said there are now more than 30,000 skills for Alexa (Amazon's voice controlled personal assistant) from outside developers, which can control more than 4,000 smart home devices from 1,200 brands. He added that Amazon has improved Alexa’s spoken language understanding by more than 25% over the past 12 months through "enhancements in Alexa’s machine learning components and the use of semi-supervised learning techniques. (These semi-supervised learning techniques reduced the amount of labeled data needed to achieve the same accuracy improvement by 40 times)."

The letter to shareholders also noted that Amazon Music now has tens of millions of paying customers. "Amazon Music Unlimited, our on-demand, ad-free offering, expanded to more than 30 new countries in 2017, and membership has more than doubled over the past six months," Bezos wrote.
Sources: Bezos letter to shareholders and Amazon statement

Fixed Line Growth for China Mobile

China Mobile recorded a 1% year-on-year increase in revenues for the first quarter of 2018, fuelled by a 3.6% increase in service revenues to 166.7 billion Chinese yuan (26.3 billion US dollars). The number of wireline broadband customers leapt 45% year-on-year to 124 million, while 4G connections climbed 18% to 672 million. source: China Mobile operating data

Netflix's Price Rises Succeed

Netflix reported 43% year-on-year growth in revenue to 3.7 billion US dollars for the first quarter, due to a 25% increase in subscribers and a 14% rise in its average selling price.  The video streaming company said that global net adds totalled 7.41 million, up 50% year-over-year and ahead of its 6.35 million forecast. "The variance relative to our guidance was driven by continued strong acquisition trends across the globe which we attribute to the growing breadth of our content and the worldwide adoption of internet entertainment," the company said.

For the current quarter, Netflix forecast revenue of 3.9 billion dollars, which would represent a 41% year-on-year increase. It anticipates 6.2 million net additions globally, including 5 million outside the US. "We’ll have 7.5 billion to 8 billion dollars of content expense (on a P&L basis) in 2018 across a wide variety of formats (series, films, unscripted, docs, comedy specials, non-English language) to serve the diverse tastes of our growing global membership base," it added. Source: Netflix statement

My report for STL Partners exploring the future of Netflix and Spotify is available here.

XBox Music Leads Artist Payouts

Source: Statista