ERIC Ericsson

By Dominic Chopping

STOCKHOLM--Sweden's Ericsson AB reported fourth-quarter earnings Friday. Here's what we watched:

EARNINGS: The telecom-equipment maker posted a net profit of 7.52 billion Swedish kronor ($900 million) compared with SEK4.43 billion in the year-earlier period, beating the SEK5.69 billion expected in a FactSet consensus.

REVENUE: Sales rose 4.8% to SEK69.59 billion against expectations of SEK68.07 billion.

WHAT WE WATCHED:

5G PROGRESS: Sales of network equipment rose 11% on year mainly driven by higher hardware sales, and all markets reported growth apart from the Middle East & Africa where the macroeconomic impact of Covid-19 had a negative effect on operators' capex levels, it said. The company said the pandemic has fast forwarded the digitalization of societies, including remote working, by months if not years. "We see more signs that countries and enterprises see 5G as a key access technology, with increasing deployment speed in Australia, the Middle East, North East Asia and the U.S.," Chief Executive Borje Ekholm said. However, the company cautioned that the Swedish telecom regulator's decision to exclude Chinese vendors from 5G networks may create exposure for Ericsson's operations in China.

INTELLECTUAL PROPERTY: Ericsson previously highlighted that it was entering litigation with Samsung but didn't expand on earlier comments on the financial implications, saying the actual financial impact will depend on the timing as well as terms and conditions of new agreements.

CASH FLOW: Free cash flow before mergers and acquisitions was SEK12.8 billion. Adjusted for payments of SEK10.1 billion related to SEC and DOJ investigations in 4Q 2019, free cash flow before M&A increased by SEK4.5 billion on the year. The company proposed a dividend for 2020 of SEK2.00, up from SEK1.50.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

January 29, 2021 08:44 ET (13:44 GMT)

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