STOCKHOLM, Jan 20 (Reuters) – Sweden’s Ericsson (ERICb.ST) on Friday reported fourth-quarter core earnings that missed expectations for the third quarter in a row as sales of 5G equipment slowed in high-margin markets such as the United States.
The company’s quarterly adjusted operating income, which excludes restructuring charges, fell to 9.3 billion kronor ($902 million) from 12.8 billion kronor a year ago. Analysts on average had forecast core earnings of $11.22 billion, according to Refinitiv data.
Net sales rose 21% to 86.0 billion crowns, beating expectations for 84.2 billion crowns.
A patent agreement settlement with Apple (AAPL.O) last month brought in revenue of 6 billion crowns, but Ericsson also incurred costs of 4 billion crowns, including possible fines from U.S. regulators and divestment clauses.
Ericsson said it expects significant growth in patent revenue over the next 18-24 months.
While the U.S. and other markets are slowing, Ericsson hopes emerging markets such as India will help it balance lower demand for some of its 5G equipment.
“Share gains in several markets could not fully compensate for lower operator capex and lower inventories in other markets, including North America,” CEO Borje Ekholm said in a statement.
Gross margin decreased from 43.2% to 41.4%, mainly due to changes in the business mix of its network business.
($1 = 10.3095 SEK)
Reporting by Supantha Mukherjee in Stockholm, Editing by Terje Solsvik
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