Ericsson Second-Quarter Earnings Lag Forecast

Ericsson (ERIC, ERIBR.HE), a mobile network gear maker, said early on Wednesday that sales jumped because of “strong momentum” in its 5G business but a move back into the black missed the market’s earnings forecast for the second quarter.

Sales rose to 54.80 billion Swedish kroner ($5.85 billion) from 49.8 billion a year ago, the company said in its earnings statement. That result beat the 53.28 billion average analyst estimate compiled by Capital IQ.

Ericsson said 5G momentum was increasing and it expects 5G to be a capacity enhancer in metropolitan areas initially.

“However, over time, new exciting innovations for 5G will come with IoT [Internet of Things] use cases, leveraging the speed, latency and security 5G can provide,” it said. “This provides opportunities for our customers to capture new revenues as they provide additional benefits to consumers and businesses.”

In line with the higher turnover, adjusted earnings per share climbed to 0.59 Swedish krona, versus a loss of 0.09 Swedish krona a year earlier. That result, however, missed the market’s guidance for 0.80 Swedish krona.

“We continue to take strategic contracts, and the large-scale network deployments expected to commence in parts of Asia will gradually impact margins negatively in the short term but strengthen our position in the long term,” the group said. “Continued technology and market investments, especially in 5G, automation and Artificial Intelligence, are fundamental a key part of our focused strategy.”

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