Ericsson Q2 Profit Climbs, China Sales Down; Signs $8.3 Bln 5G Deal With Verizon; Stock Down

Shares of Ericsson were losing around 8 percent in the trading in Sweden after the telecom equipment maker reported Friday lower revenues in its second quarter mainly due to weak sales in Mainland China. Net income, however, climbed from last year.

Earlier in the day, the company also announced a multi-year $8.3 billion agreement to provide its 5G solutions to accelerate Verizon Communications, Inc.’s next-generation 5G network in the U.S.

Under the deal, Ericsson will deliver 5G solutions, including Massive MIMO, Ericsson Cloud RAN and software to strengthen and expand Verizon’s world-class 5G network.

In 2020, Verizon was the first communications service provider to receive a commercial 5G mmWave Street Macro base station from Ericsson’s U.S. smart factory in Lewisville, Texas.

In mid June, Ericsson in its Mobility Report, had said that worldwide 5G mobile subscriptions are estimated to exceed 580 million by the end of 2021. During the first quarter this year, 5G subscriptions with a 5G-capable device grew 70 million. It is expected that there will be about 3.5 billion 5G subscriptions and 60 percent 5G population coverage by the end of 2026.

For the second quarter, Ericsson’s net income grew 51 percent to 3.9 billion Swedish kronor from 2.6 billion kronor last year.

Earnings per share gained 49 percent to 1.10 kronor from prior year’s 0.74 krona.

Reported EBIT climbed 51 percent from last year to 5.8 billion kronor. EBIT excluding restructuring charges was 5.8 billion kronor, compared to prior year’s 4.5 billion kronor.

The company’s revenue for the quarter, meanwhile, fell 1.3 percent to 54.9 billion kronor from 55.6 billion kronor last year.

Group organic sales grew 8 percent, despite a sales decline in Mainland China of 2.5 billion kronor.

Organic sales in Networks grew 11 percent, driven by market share gains. Organic sales in Digital Services were stable, despite weak sales in China.

In Stockholm, Ericsson shares were trading at 105.24 kronor, down 8.22 percent.

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