Ericsson results beat expectations
Ericsson reported sales up 14% year-over-year, beating expectations and seeing particularly strong growth in the Indian market, while navigating a slight drop in network sales overall as the pace of early 5G deployments dropped off and carriers re-assess their equipment inventories built up as a result of supply chain squeezes.
Net sales in Southeast Asia, Oceania and India were up 132% from the same time last year, Ericsson said, helping to offset a 20% drop in the Northeast Asia region and an 18% drop in North America. India is Ericsson’s second-largest market after the United States, according to Reuters.
Organic sales were flat year-over-year, the company said, with networks organic sales down 2%. The latter figure was “driven by lower operator capex and inventory optimization among multiple customers,” Ericsson said.
“As expected, customers in early 5G markets have slowed the deployment pace
somewhat,” President and CEO Börje Ekholm indicated in comments about the results, adding, “Some customers have also lowered the elevated inventory levels built up in a tight supply environment. … Significant growth from large roll-out projects did not fully offset the sales impact from early 5G markets.” He said that Ericsson expects inventory adjustments to mostly take place during the second quarter, with the possibility of spilling into the third quarter.
Ericsson’s gross income, excluding costs associated with the company’s restructuring (the company said in February that it plans to lay off around 8,500 employees), was up, and the company said that was primarily driven by its enterprise segment, as well as cloud software and services. The enterprise segment saw 19% organic growth, Ekholm indicated.
He also said that Ericsson is “working with front-runner customers to establish the market for network APIs, and we see great interest from early adopters.” Leveraging and monetizing network APIs was one of the topics of focus at Mobile World Congress Barcelona, and Eckholm said that Ericsson expects to see the first revenues “late this year,
positioning us for revenue ramp-up in 2024 and 2025 as our transformation into a platform company accelerates.
“It will take some time to build this new network API market, but we believe it can develop faster and grow bigger than the market for traditional communication APIs,” he added.
