Ericsson (NASDAQ: ERIC) reported modest second-quarter 2024 results, with the top line surpassing the Zacks Consensus Estimate and the bottom line missing the same. In spite of steady sales in the Enterprise, Cloud Software and Services segment, soft demand in the Networks led to a top-line contraction year over year. Solid sales growth in North America is offset by declining capex investments in India. Higher IPR licensing revenues, cost optimization and a robust portfolio boosted the gross margin. Healthy improvement in free cash flow backed by improvement in working capital is a tailwind.

Net Income

Ericsson reported a net loss of SEK 11 billion ($1.03 billion) or a loss of SEK 3.34 (31 cents) per share in the second quarter compared with a net loss of SEK 0.6 billion or SEK 0.21 per share in the prior-year quarter. Non-cash impairment charges of SEK 11.4 billion and a decline in net sales impacted the bottom line during the quarter. Adjusted earnings came in at a penny per share, missing the Zacks Consensus Estimate of 5 cents.

Ericsson Price, Consensus and EPS Surprise

Ericsson price-consensus-eps-surprise-chart | Ericsson Quote

Revenues

Ericsson generated SEK 59.8 billion ($5.59 billion) in revenues, down 7% year over year. Demand softness in the Networks segment impeded the top line. However, the top line surpassed the Zacks Consensus Estimate of $5.29 billion.

Segment Results

The Networks segment generated SEK 37.7 billion ($3.53 billion), down 11% from the year-ago quarter’s tally of SEK 42.4 billion. The top line beat our revenue estimate of SEK 36.3 billion. The segment’s gross margin improved to 46.1% from 39.3% in the year-ago quarter. The unit registered a 55% sales decline in South East Asia, Oceania and India. Following a record level of investments in 2023, …

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