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Bloomberg
Ericsson AB posted earnings that missed analyst estimates for the first time in six quarters and warned its rollout of 5G mobile networks in Asia would weigh on profits, in a rare setback to CEO Borje Ekholm’s turnaround efforts.
With Ericsson battling Finland’s Nokia Oyj and China’s Huawei Technologies Co for pole position in 5G, Ericsson said the first big deployments in Asia will gradually pull down margins, although not enough to jeopardise profitability targets for 2020.
Wireless operators are preparing for heavy spending on the new networks that offer super-fast download speeds, minimal delay and capacity for more simultaneous connections. Their suppliers are likely to sacrifice short-term profits to win the first big contracts as that gives them a better chance of securing longer-term business.
With Huawei targeted by a US campaign to have it blocked on security grounds, its Nordic
rivals may be able to pick up more work. In an interview on Bloomberg TV, Ekholm said Ericsson is gaining market share, though it hasn’t won any contracts as a direct result of Huawei’s troubles.
“We’re trying to strengthen our footprint in front of the 5G rollout,†he said. “Of course that is going to impact the margins, but as you see on networks, we can really manage that within the guidance we have given.’’
Ericsson shares, which gained after the previous five quarterly reports, fell as much as 3.1 percent in early trading and were down 1.8 percent in Stockholm.