In addition to a catastrophic economic situation, the company's management has for years lent itself too easily to criticism; but the former won't last forever, while the latter seems at last to be improving.

Between its corruption scandals and other setbacks, we recalled in a note last October that Ericsson's R&D investments resembled a sort of bottomless pit, while the acquisition of Vonage had apparently been grossly overpaid. In both cases, the destruction of value was worrying.

The group published its annual results yesterday. The year ended on a very gloomy note, with sales declining organically by 10%. The integration of Vonage and the development of the enterprise services business reduced this decline to 3%, but did not halt the free-fall in profitability, with operating profit before depreciation and amortization down by half on last year.

Naturally, it is the network equipment division - which accounts for two-thirds of consolidated sales - that is dragging the whole business down. Organic sales fell by 23%, which management modestly attributes to customers "conserving their cash flow".

The financial situation of operators is forcing them to economize. In the United States, their debt levels are at the limits of sustainability, while interest rates have begun to rise. In Europe, because of a far too fragmented market, they are unable to pass on the price rises needed to finance a new investment cycle.

Only South-East Asia offers a few growth opportunities, but this is of course hardly enough to keep the boat afloat. Ericsson has also announced that it sees no inflection in 2024, with markets frozen everywhere except China. How far away the promises of a new investment cycle driven by 5G seem!

The cloud and software segment, for its part, is growing at a slower pace than inflation and is not making any money. The same goes for the enterprise services segment, which remains marginal in the business portfolio, accounting for less than a tenth of consolidated sales, and is also in the red.

Despite this appalling overall situation, the Swedish group - which has cut back severely in recent months - has managed to control the cash hemorrhage. That's something. What's more, even if management doesn't foresee a turnaround over the next twelve months, it's clear that operators' inventories are becoming increasingly depleted; they'll have to renew them at some point.

As with Nokia - see our December note on this subject - some analysts estimate that the value of Ericsson's patent portfolio covers at least half of its enterprise value. This would provide a substantial margin of safety for investors tempted to bet on a brighter future.

The market welcomed the annual results published this morning. It too may feel that the worst is now over.