Market Outlook
Outlook for the Second Half of 2010
Signs of market recovery have continued during the first half of 2010 in both generic economic environment, and within the EBīs Automotive and Wireless Business Segments. However, economic uncertainties and challenges in obtaining funding have increased the risk of credit losses and may affect the demand for the EBīs services, solutions and products. This may also reflect to the net sales and result of the second half of 2010. More specific market outlook is presented under the “Business Segmentsī development during the second quarter 2010 and market outlookī section, and uncertainties regarding the outlook under the īRisks and uncertaintiesī section.
Our main focus for the second half of 2010 is to improve the profitability further.
EB expects that the net sales of the second half of 2010 is higher than in the second half of 2009 (EUR 73.6 million). The operating profit of the second half of 2010 is expected to be at the level of or better than the operating profit of the second half of 2009 (EUR 0.0 million).
Due to the holiday period and the nature of R&D services business the third quarter of 2010 will be weaker than the latter part of the half.
Automotive Market Outlook
The majority of the innovation and differentiation in the automotive industry is brought about by software and electronics. The share of electronics and software in cars has grown significantly during the past years and it is expected that the trend of increased use of software in automotive continues to prevail in the market. The estimated annual automotive software market long-term growth rate of some 15 per cent (Frost & Sullivan) was recently negatively affected by the downturn of the automotive industry. However, during the last months the market has clearly improved and is expected to return to the level of the long-term growth.
In order to enable faster innovation, to improve quality and development efficiency and to reduce complexity related to software, the use of standard software solutions is expected to increase in the automotive industry.
The underlying growth of the automotive software market will continue and the cost pressures of the automotive industry are expected to accelerate the need of productized, efficient software solutions EB is offering.
EBīs net sales cumulating from the automotive industry are currently primarily driven by the development of new cars and platforms and dependency on production volumes of the car industry is limited. However, over the years to come dependency on the production volumes is increasing as a result of the transition towards software product business models.
Wireless Market Outlook
The global mobile device market volumes have grown as expected during the first half of 2010. The value share is expected to move towards higher-end due to the increased demand for new features and services. The global mobile infrastructure market is expected to be flat during 2010 and the consolidation of the industry may continue. The mobile satellite communication service industry is introducing new data and mobile communication services with new operators being formed and traditional ones upgrading their solutions and offerings.
The wireless communication R&D services market continues to be challenging and the continuing price pressure drives increasing off-shoring in the industry. However, OEMs are expected to increase their R&D flexibility that can create new opportunities for partnering for EB. New open software architectures and platforms are creating opportunities for companies such as EB with strong integration capabilities.
LTE standard continued gaining strength and EBīs business driven by LTE is expected to increase.
Mastering of multi-radio technologies and end-to-end system architectures covering both terminal and network technologies, has gained importance in the complex wireless technology industry. The demand for EBīs hybrid satellite-terrestrial device solutions is expected to continue. The satellite-terrestrial and Mobile Satellite Services (MSS) market demand is expected to start moving from the current reference design phase towards the launch of commercial products and services. This can create new service and product related business opportunities for EB.
The current economic downturn did not have a significant effect on the overall wireless communications tools market. Need for advanced development tools 3GPP LTE technology is expected to remain as a driver for the demand in the medium and long term. EB provides world leading channel emulation tools for the development of MIMO based 3GPP LTE and other advanced radio technologies.