Börje Ekholm, President and CEO of Ericsson (NASDAQ:ERIC), in announcing his company’s second quarter earnings, said although it faced “challenging market conditions,” it delivered a solid quarter and met expectations.
“We continue to execute with discipline and focus without losing sight of the long term. We are leveraging our 5G technology, growing our enterprise business and driving our cultural transformation to accelerate our growth trajectory and shape the communications industry landscape,” he said last Friday.
Ericsson cited an organic sales decline of 9 percent, as a Networks decline of 13 percent was partly mitigated by a 20 percent organic growth in Enterprise. Group EBITA excluding restructuring charges was $7.5 billion, or 5.7 percent of sales.
In Networks, the company said it saw strong execution with record build-out speed in India. Sales growth in India partly offset the expected softening it saw in other markets, notably in North America, where build-out pace moderated and customer inventory levels were reduced. Despite the business mix change and several large rollout contracts, Networks had a gross margin of over 39 percent.
“In Enterprise we saw continued strong growth in Enterprise Wireless Solutions, and we recorded positive EBITA in the Global Communications Platform business,” Ekholm said. “We landed another important 5G licensing agreement with a device vendor, further validating our IPR portfolio strength, positioning us well for continued IPR growth as we license vendors previously unlicensed for 5G.”
Ekholm estimates 75 percent of all base station sites outside China are not yet updated with 5G mid-band, and migration to 5G standalone will continue in order to deliver on 5G’s full potential.
“We are confident that the market will recover as a consequence of these factors,” he said, “and Ericsson is well positioned to benefit from increased investments. We expect that the market will see a gradual recovery in late 2023 and improve in 2024.”
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