An upturn in business from North America provided a glimmer of light in an otherwise tricky second quarter for Ericsson, a period of lower overall sales, a higher net loss and a continued justification of its $6.2 billion purchase of cloud company Vonage in 2022.
In earnings documents, Ericsson bosses pointed to an improving gross margin and solid free cash flow of SEK7.6 billion ($721.2 million), excluding merger and acquisition numbers.
Ericsson president and CEO Borje Ekholm said the vendor āmaintained our leading market positionā during Q2, pointing to a return to growth in North America alongside the cash flow and margin figures.
Ekholm added Ericsson āremained focused on matters in our controlā, pointing to optimisation efforts in a āchallenging marketā marked by āunsustainably lowā industry investment levels.
Digitalisation
The executive defended Vonage as āfoundationalā to efforts to deliver a āglobal platform for network APIsā. Ericsson last week revealed the cloud unit accounted for the bulk of a SEK11.4 billion impairment charge booked for the quarter, the second big hit relating to the business within the past 12 months.
Ekholm explained the latest charge was caused by a slowdown in Vonageās current business, but appeared to argue there is a long-term payoff to be had as APIs become a critical element in enterprise and consumer digitalisation moves, and so ādrive future growth in the telecoms industryā.
India was another factor impacting Ericssonās sales, with Ekholm stating operator spending slowed.
Operators in the nation are being stretched by various regulatory and infrastructure investment factors, as evidenced by tepid uptake for 5G-suitable spectrum in an auction during June.
Ekholm expects little in the way of recovery from India in the second half of 2024, tipping ācontract deliveries in North Americaā to take up the slack.
Net loss grew from SEK600 million in Q2 2023 to SEK11 billion, albeit this counts the impairment. Sales of SEK59.8 billion were down 7 per cent.
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