Ericsson Looks for a Home in the Cloud

A decade ago, telephone pioneer Ericsson managed to reinvent itself as a maker of network equipment, selling pricey hardware to telecommunications companies struggling to keep up with mobile subscription growth. Suddenly, the Swedish company was more relevant than it had been since the 1920s. Now, with its biggest customers slowing the pace of their expansion or shifting more of their data crunching to the cloud, Ericsson is trying to follow.

About 40 percent of the world’s wireless calls and data move through Ericsson’s network hardware. The company, with a market valuation of $39 billion, sells to and often operates the equipment for carriers including AT&T and Vodafone. Ericsson’s revenue fell in three of its past five quarters, and analysts are projecting that the company will see a third straight year with little or no sales growth. Globally, cloud-infrastructure services were a $4 billion business in the second quarter—up 50 percent from the same period a year earlier, according to analyst Synergy Research Group.