Nokia, Ericsson Warn of Margin Pressures; Shares Fall
21 October 2022 - 5:22AM
Dow Jones News
By Sabela Ojea
Shares of Nokia Corp. and Telefon AB L.M. Ericsson on Thursday
fell after both European telecommunications equipment makers posted
disappointing margins for the third quarter on lower patent-related
revenue.
At 13:20 EDT, shares of Ericsson were down 15% at $5.46, with
Nokia's shares down 8.7% at $4.17.
The timing and value of new and existing patent licensing
agreements with smartphone vendors, automotive companies, consumer
electronics companies and other licensees are part of Nokia and
Ericsson's associated risks.
The Finnish company Nokia's third-quarter comparable gross
margin fell to 40.4% from 40.8%, with its operating margin
declining to 10.5% from 11.7%, despite seeing improvements in
mobile networks and network infrastructure profitability.
The Swedish group Ericsson also warned of its margins being
weighed by expiring patent license agreements pending renewal and
higher costs.
Increased investments in the supply-chain also hit Ericsson's
margin, with component costs and inflation set to continue weighing
on margins in the coming quarters, Ericsson said.
Ericsson's networks gross margin fell to 44.4% from 47.8%, while
the earnings before interest and taxes margin slipped to 19.9% from
23.7%.
Write to Sabela Ojea at sabela.ojea@wsj.com; @sabelaojeaguix
(END) Dow Jones Newswires
October 20, 2022 14:07 ET (18:07 GMT)
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