News
This week, Ericsson has released its first quarter financial results for 2024, which showed profits had risen despite a decline in sales
In spite of a 14% decline in sales, largely driven by a decrease in Networks sales (-19%), Ericsson achieved a gross margin improvement to 42.7%.
The company attributed this lift to its product portfolio strength and ongoing cost-efficiency measures (which includes significant job cuts).
“We maintained our leading market position, but as expected our customers continued to exercise caution with their investments,” said Börje Ekholm, President and CEO, noting this is mainly due to uncertain economic conditions and current high interest rates.
It is the same reason the company expects the RAN market to decline further, at least until the end of the year.
“Against this tough market backdrop, we delivered solid expansion in gross margins. This underscores the competitiveness of our solutions, our commercial discipline, and our actions on costs,” Ekholm continued.
Share price rose by 6% in early trading on Tuesday morning.
“For the rest of the year, we expect the mobile networks market to remain weak,” said Ekholm in the earnings call.
“If current trends persist, we expect our sales to stabilize during the second half of the year,” citing “recent contract wins and the normalisation of customer inventory levels in North America”.
In December, Ericsson beat its close rival Nokia into securing a $14 billion Open Ran deal with AT&T. The partnership will mean that Ericsson will carry 70% AT&T’s wireless traffic by the end of 2026.
Nokia noted its “disappointment” in the deal’s outcome, but both companies are still grappling with cost-cutting. Nokia recently announced that it would cut 14,000 jobs to shrink costs by up to €1 billion by 2026, and Ericsson are set to cut 8,500 jobs this year.
Want to keep up to date with all of the latest international telecoms news? Sign up for Total Telecom’s daily newsletter
Also in the news:
South Korea to invest $7 billion in AI semiconductors
Swisscom expands 5G partnership with Ericsson
Daisy Group set to acquire 4Com for £215m