Swedish telecom equipment maker Ericsson has reported a second-quarter core profit above market expectations, aided by cloud services and orders but warned that it is under pressure from rising component costs linked to AI demand.<\/p>\n
High margins from some businesses helped beat analysts’ expectations, but the company has been seeing lower sales at its mainstay mobile equipment business in key markets such as North America.<\/p>\n
Ericsson said it was under pressure as the global AI build-out hits suppliers, but there was limited financial impact in the second quarter due to its resilient components supply chain.<\/p>\n
Ericsson reported a fall in adjusted operating profit to 6.52 billion Swedish crowns ($671.70m) for the second quarter, but beat analysts’ average expectation of 6.42 billion, according to an LSEG poll.<\/p>\n
Quarterly net sales fell 6% from a year earlier to 52.7 billion crowns, lagging the LSEG poll estimate of 53.6 billion crowns.<\/p>\n
Net sales at Ericsson’s high-margin network business, the biggest by revenue, fell 8% in the quarter, but the company expects growth to exceed seasonality in the third quarter.<\/p>\n
Ericsson expects the increase in component costs due to the AI build-out to put pressure on the company to raise prices.<\/p>\n
“The whole AI build-out is putting quite the pressure on the whole industry, including us,” CFO Lars Sandstr\u00f6m told Reuters.<\/p>\n
Apart from memory prices, it is also affecting custom chips the company uses in building telecom infrastructure, he said.<\/p>\n
Memory makers have in recent months prioritisedorders from AI chipmakers, leaving little supply for electronics makers that have been forced to increase prices.<\/p>\n
Outgoing CEO Borje Ekholm said the company would continue to pursue internal measures and pricing actions to help offset the effect in the coming quarters.<\/p>\n
“We are taking near-term actions across the businesses, including commercial measures, for example, product substitution, as well as supply chain actions and targeted cost initiatives,” Ekholm said on a conference call.<\/p>\n
Last month, Ericsson announced Ekholm’s departure, and many employees were told about their termination as part of a restructuring.<\/p>\n
Sandstr\u00f6m said there would be more restructuring, including layoffs, during the rest of the year.<\/p>\n","protected":false},"excerpt":{"rendered":"Swedish telecom equipment maker Ericsson has reported a second-quarter core profit above market expectations, aided by cloud services…\n","protected":false},"author":2,"featured_media":555921,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[220,218,219,61,60,80],"class_list":["post-555920","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-ie","tag-ireland","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/555920","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=555920"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/555920\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/555921"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=555920"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=555920"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=555920"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}