Ericsson rises 8.5% as networking, higher margins drive strong Q4
Jan. 29, 2021 11:27 AM ETTelefonaktiebolaget LM Ericsson (publ) (ERIC)ERICBy: Jason Aycock, SA News Editor4 Comments
- Ericsson (NASDAQ:ERIC) is up 8.5% after topping expectations with its fourth-quarter earnings, riding momentum from 5G networking contracts amid a ban on Chinese rival Huawei in several countries.
- Revenues jumped 13% to 69.6B Swedish kronor. Perhaps more important, gross margin improved by nearly four percentage points, to 40.6% from a year-ago 36.8%.
- Operating margin jumped to 15.8% from 9.2%. For the full year, "our operating margin of 12.5% exceeded our 2020 target and reached the 2022 Group target range two years early," says CEO Börje Ekholm.
- Operating income jumped 80%, to 11B kronor from 6.1B kronor. And net income rose to 7.2B kronor from a year-ago 4.5B kronor, about a 60% gain.
- Sales by segment: Networks, 49.4B kronor (up 11%); Digital Services, 12.7B kronor (down 4%); Managed Services, 5.8B kronor (down 17%); Emerging Busines and other, 1.7B kronor (flat).
- Cash flow from operations was 13.9B kronor, up from a year-ago 0.5B. Free cash flow before M&A was 12.8B kronor; adding in that impact, free cash flow was 3.5B kronor vs. a year-ago -3.2B. (The prior year saw impact from payments of 10.1B kronor related to resolving U.S. SEC and DOJ investigations.)
- Earnings call presentation
- Earnings call transcript
- Press release