Ericsson's Q4 Sales Plunge 16% As Global Challenges Weigh, Forecasts Further Decline Outside China
Portfolio Pulse from Anusuya Lahiri
Ericsson (NASDAQ:ERIC) reported a 16% year-on-year decline in Q4 FY23 sales, with organic sales down 17%. The company saw a decrease in Networks' organic sales by 23% and a decline in sales in India, partially offset by growth in Enterprise. Adjusted gross margin fell slightly, while adjusted EBIT margin improved due to higher-margin software sales. Ericsson forecasts a market decline outside China in 2024, with a decrease in 5G gear demand. The company has a $14 billion deal with AT&T (NYSE:T) for Open-RAN technology, which is expected to boost Ericsson in the second half of 2024. Ericsson named Lars Sandström as the new CFO, effective April 1, 2024. ERIC shares were up 1.37% in premarket trading.
January 23, 2024 | 2:10 pm
News sentiment analysis
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NEUTRAL IMPACT
Ericsson reported a significant decline in Q4 sales and anticipates a challenging market in 2024, but the AT&T deal may improve prospects in the latter half of the year.
The reported decline in sales and the negative outlook for 2024 suggest bearish sentiment, but the AT&T deal provides a potential upside. The premarket stock price increase indicates a mixed short-term impact.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100
POSITIVE IMPACT
AT&T's partnership with Ericsson for Open-RAN technology is expected to boost Ericsson's performance in the second half of 2024.
AT&T's deal with Ericsson is significant for Ericsson's future performance, potentially benefiting AT&T as well by association and the adoption of new technology.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70