Ericsson’s Q4 Earnings Miss Expectations

Ericsson AB reported Q4 earnings on Friday. The Swedish company reported net profit attributable to shareholders of 6.07 billion Swedish kronor ($588.2 million) compared with SEK10.08 billion a year earlier. Analysts polled by FactSet expected net profit of SEK7.05 billion.

Sales rose 21% to SEK86.0 billion versus the SEK84.78 billion expected in a FactSet poll. Intellectual property licensing revenues increased to SEK6.0 billion in the quarter from SEK2.4 billion last year, boosted by a licensing settlement with Apple Inc.

Group gross margin declined to 41.4% from 43.2% last year. The new Apple patent license agreement had a positive margin impact in networks and cloud software and services. Gross margin in networks decreased to 44.4% from 46.3% primarily as a result of a business mix shift on the back of market share gains in several geographies, resulting in a higher share of services sales in large rollout projects that are contributing to gross profit but are gross margin dilutive, Ericsson said.