- Despite a 7% revenue drop, Ericsson's shares bounced on better North American prospects
- Ericsson's CEO still said the global RAN market is not good
- The firm also reported another major writedown on Vonage
Ericsson had a slightly better than expected second quarter, as it reported a smaller than anticipated 7% revenue drop for the period, aided by growth in the North American market.
Notably, the major radio access network (RAN) deal that AT&T signed with Ericsson in December 2023 is starting to have an effect. Ericsson reported a 14% increase in North American sales, citing “some larger customers” increasing network investments.
Despite some North American good news, however, conditions in major markets such as India remain tough. “We expect market conditions to remain challenging this year, as the pace of India investments slow, however our sales will benefit during the second half from contract deliveries in North America,” CEO Börje Ekholm, Ericsson president and CEO, said in a statement.
Of the second quarter, in general, Dell'Oro analyst Stefan Pongratz said on LinkedIn: “There should be sequential improvements in 2Q, but we are still modeling RAN to record a fifth straight quarter of YoY declines in 2Q, partly due to tough comps in India."
The firm said that Huawei is first in overall RAN rankings worldwide, with Ericsson second and local rival Nokia third. Interestingly, despite Ericsson’s much vaunted open RAN deal with AT&T, Dell’Oro doesn’t yet list it in the open RAN rankings, which are led by Samsung, followed by NEC and Fujitsu.
Cloud trouble
Of course, Ericsson had pre-released the news that could spook investors. It said earlier this week that it would report a non-cash impairment of $1.1 billion (11.4 billion SEK) in its Q2 results on cloud and network application programming interface (API) enterprise unit Vonage. It had already announced a $2.92 billion writedown on the unit in 2023.
Ericsson reported a loss of $1.04 billion (10.95 billion SEK) in the second quarter. It posted revenue of $5.69 billion (59.9 billion SEK) in the period, beating analyst expectations. Its shares were up over 4% on Friday morning on the news at 70.68 SEK.