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What Drove Ericsson’s Earnings in 1Q18

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Apr. 23 2018, Updated 8:55 a.m. ET

Ericsson’s earnings in 1Q18

Ericsson (ERIC) reported impressive profits in its quarterly results on April 20, which led the stock up 17%. Ericsson posted adjusted earnings of $0.01 per share in the first quarter of 2018. In comparison, analysts expected Ericsson to post adjusted losses of $0.02 in 1Q18 with a high EPS estimate of $0.00 and a low estimate of -$0.02.

In the past four quarters, Ericsson has beat earnings estimates only in the fourth quarter 2017. In both second and the third quarters of 2017, the company lagged behind earnings expectations. =Ericsson met analyst estimates in 1Q17.

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Cost cutting helped Ericsson improve earnings

Though 1Q18 earnings lagged behind 1Q17 earnings of $0.02 per share, they did better than analysts’ expectations. The company’s operating and net losses improved. The Stockholm-based Ericsson posted a loss of $103.2 million in 1Q18.

The company’s initiative to reduce costs helped cut its losses. Earnings also benefited from increased sales of higher-margin radio equipment products as carriers start to roll out 5G wireless networks.

Ericsson has a market cap of $25.7 billion. Peers Cisco (CSCO), Nokia (NOK), and Juniper (JNPR) have market caps of $212.4 billion, $33.8 billion, $8.4 billion, respectively.

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