Investors see the silver lining in UBS’s gray cloud
Smartphones: sales up, but less messaging hurts Swisscom revenue as people use more apps, social networking
ZURICH, SWITZERLAND – Switzerland’s largest bank, UBS, turned in a glum first quarter financial report 2 May, showing a net profit of CHF828 million, down by 54 percent compared to the same period a year earlier. An accounting charge led to a loss at the investment bank: the value of UBS debt has risen, making it more expensive for the bank to buy back its own bonds. Bloomberg points out that “Chief Executive Officer Sergio Ermotti is shrinking UBS’s investment bank by almost half as stricter capital requirements and Europe’s sovereign-debt crisis hurt profits”, noting that Ermotti has called 2012 a year of transition for the investment bank arm of UBS.
Investors were not unhappy, however, with shares in the bank rising 6 percent in morning trading after the results were announced, reports Reuters.
The Financial Times reports that “the Swiss group issued an uncharacteristically upbeat forecast, emphasizing its ability to attract new money to its core private bank while shedding risk-weighted assets and boosting capital ratios”, while nevertheless cautioning that progress will be difficult until progress is made resolving the US federal budget problems and the eurozone debt crisis.
Social networks cut Swisscom revenue from messaging
Swisscom‘s net revenue slipped by 2 percent to CHF2.08 million in the first quarter, but it issued an update statement and pointed out that “capital expenditure in Swiss infrastructure increased by 24.1 percent to CHF 366 million. Swisscom is investing heavily in broadband network expansion throughout the country in order to further boost competitiveness. Headcount in Switzerland increased by 294 FTEs as a result of company acquisitions, network expansion and growth in customer services.”
An area hit hard was revenue from mobile phone messaging, down 28 percent to CHF59 million, which the company attributes to growing up of IP-based applications and social media. “Average revenue per mobile user per month (ARPU) declined by 4.3 percent to CHF 44.” Swisscom’s statement shows, despite good growth in the number of mobile access lines in Switzerland, up by 221,000, a 3.8 percent increase, and sales of 328,000 mobile devices, up 1.9 percent.
Smartphones accounted for 67 percent of mobile phone sales.
