Ericsson came up posting its above-than-forecasted first-quarter profit on Wednesday largely because of the strong growth in North America and moves to cut costs, prompting the network equipment maker to raise its full-year forecast for global the global networks market.
The stronger growth with above-estimates profit led its share to rise by more than 3 percent to a highest in last four years.
It was also the fifth quarter in a row when Swedish company beat the profit expectations, because of a cost cutting strategy adopted by the company on the middle of the decade after an industry-wide recession, and because of a new cycle of network up gradation started by the company for next-generation 5G equipment.
In the network equipment market worldwide, Ericsson sees Huawei as one of its larger competitors and because of suspicion of Western countries about the Chinese group of being used by the Chinese government for spying on them, some analysts are seeing Ericsson to be getting benefit of it.
Though the Chief Financial Officer of Ericsson Carl Mellander denied any effect on its supply orders due to Huawei’s controversial situation, but agreed with the fact that security concern could have impact on the customer’s decisions.
The operating margin, excluding one-off items and restructuring charges incurred on restoration of its Business Support Unit, was 7.2 percent, which the company is pledging to be reaching to more than 10 percent in 2020 as an essential target of it.
In its first-quarter, Ericsson succeeded to swap a year-ago loss of 312 million crown with an operating profit of 4.9 billion crowns, which also came above a mean forecast of 2.8 billion by a Reuters poll for the same.
Ericsson’s revenue for the first quarter rose to 48.9 billion against a forecast of 48.2 billion, driven by sales of its 5G equipment in biggest market of North America, which have a wider access to the required spectrum.