A Slowdown in 5G Equipment Sales Affects Ericsson’s Earnings

Ericsson’s earnings in the fourth quarter of 2022 were lower than expected. Sales of 5G equipment have slowed in high-margin markets affecting the earnings report for the final period of the year.

Company executives call for caution on the prospects in the first half of 2023 as operators continue to tighten their belts in response to economic headwinds. The vendor booked a net profit of SEK6.2 billion ($601.7 million), down 39% compared with the same period in 2021, while revenue went up 21% to SEK86 billion. As previously announced by Ericsson, SEK4 billion worth of one-off charges were taken in the quarter. These covered the divestment of its IoT business, changes in its cloud software and services segment, and a provision to cover a complaint from US authorities about alleged corruption in Iraq.

On the positive side, Ericsson pointed to the signing of a long-term patent deal which helped bump its revenue from IP to SEK6 billion. CEO Borje Ekholm expects the segment to offer significant revenue growth in the next 18 months to 24 months. More generally he added the company expects to partly offset near-term headwinds from further market share increases, though described its near-term outlook as uncertain.

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