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Earnings: Stronger 5G market lifts Ericsson’s ambitions

Swedish firm Telefonaktiebolaget LM Ericsson (NASDAQ: ERIC) on Thursday reported solid quarterly and results strong guidance, riding on global the 5G wave. For the third quarter, the telecommunications firm’s revenue grew 6% to SEK 57.1 billion, riding on growth in North America and North East Asia.

Meanwhile, the company swung to a loss of SEK 1.89 per share from a profit of SEK 0.83 per share last year, despite an improvement in gross margin, hurt by certain one-off charges.

ericsson earnings
Image by Kurniadi Ilham from Pixabay

Thanks to a stronger 5G market, Ericsson also raised its sales guidance for fiscal 2020 to a range of SEK 230 billion to SEK 240 billion, from the earlier prediction of SEK 210 billion to SEK 220 billion. Meanwhile, the company kept unchanged its expectation of achieving operating margin of more than 10% in 2020.

“5G is taking off faster than earlier anticipated and we see initial 5G buildout as a capacity enhancer in metropolitan areas. However, over time, new exciting innovations for 5G will come with industrial and IoT use cases, leveraging the speed, latency and security characteristics of 5G,” the company said in a statement.

READ: Huawei posts higher sales despite restrictions from the US

The company added that China is the largest market for 5G infrastructure deployment, which is expected to start in near term.

Ericsson shares were trading up over 7% during pre-market hours on Thursday. The stock has declined 17% in the trailing six months.

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