Ericsson profit beats forecast, cools patent fight impact

Ronnie Leten

Sweden’s Ericsson on Wednesday reported first-quarter core earnings above market estimates as strong sales of 5G equipment offset a loss of royalty income due to a patent fight with Samsung Electronics.

The company’s quarterly adjusted operating earnings rose to 5.3 billion Swedish crowns ($627.9 million) from 4.6 billion a year ago, beating the mean forecast of 5.0 billion crowns, according to Refinitiv estimates.

Total revenue for the telecom equipment maker, a rival of China’s Huawei Technologies Co Ltd and Finland’s Nokia, stood at 49.8 billion, unchanged from last year.

The company’s revenue took a hit in the quarter due to the fight with Samsung Electronics over royalty payments and patent licenses.

Intellectual Property rights (IPR) or patent licensing revenue fell to 0.8 billion crowns in the quarter from 2.5 billion a year earlier.

Ericsson had earlier warned here that delayed royalty payments and potential legal costs could reduce its operating income by 1-1.5 billion crowns ($118-$177 million) per quarter, beginning in the first quarter.

KPN NV, the largest Dutch telecommunications company, and an Ericsson customer has also filed here a patent-infringement complaint against the company.

Patent disputes are common technology companies and can go on for years but any halt in payments could be recouped once the dispute is resolved.

Nordic rival Nokia, however, has settled here patent disputes with Samsung and PC maker Lenovo Group in the past two months.