Ericsson reports better-than-expected earnings on 5G

Losses at Ericsson narrowed during the fourth quarter as the company experienced its first full year of organic sales growth since 2013, the company reported today. The Swedish telecom equipment maker reported (PDF) a net loss of $723.3 million on almost $7.1 billion in sales during the quarter.

Sales jumped 10% year over year, and quarterly losses were slashed by almost one-third from the year-ago period when Ericsson reported a net loss of roughly $2 billion. The company is targeting full year sales in 2020 in the range of between $23.2 billion and $24.3 billion.

“Increased investments in [research and development] for future growth, managed services contract reviews, combined with efficient cost control have proven to be successful, with improved competitiveness and profitability as a result,” Ericsson CEO Börje Ekholm said in a prepared statement. “As the industry moves to 5G and IoT, we will now take the next step, focusing on profitable growth in a selective and disciplined way.”

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Indeed, the oncoming deployment of 5G networks positions Ericsson for an upswing after a long lull as operators pulled back on network investments. By the end of 2018, the company had 10 commercial 5G contracts with operators and 42 ongoing 5G trials. Sales in Ericsson’s networks business was up 12% year over year.

Ericsson could also make gains in 5G if Huawei’s ongoing controversies lead more operators to look elsewhere for equipment. At the end of 2018, the Chinese telecom giant said it had signed 26 commercial contracts for 5G and had already shipped more than 10,000 5G base stations to markets around the world.