The Swedish vendor reported higher margins in key areas like mobile networks, but falling sales – meanwhile its drone sensing and tracking trial with AT&T is a whole new ballgame for 5G
Ericsson reported a rise in core Q2 profit above the market’s expectations on Tuesday, boosted by cloud services and orders, although its revenue missed consensus market forecasts. Adjusted operating profit came in at SEK 6.52 billion (€590 million) beating average market expectations of SEK 6.42 billion, although net sales fell 6% year-on-year to SEK 52.7 billion.
The company warned of rising component costs due to the soaring demand for AI. Ericsson said the cost of AI components had little financial impact in Q2 because of its resilient supply chain.
Likewise, organic sales in the key networks business fell 4% due to lower demand in the higher-margin North American and European markets as operators completed their first round of 5G network deployments. Yet its adjusted gross margin rose to 48.4%, due to “solid operational execution” and better margins in mobile networks.
The vendor highlighted annual recurring IPR revenue of roughly SEK 13.5 billion and has now settled agreements with the top 10 smartphone vendors. However, adjusted organic sales decreased by 1% year-on-year which was primarily due to lower IPR licensing revenues, related to a partial settlement in the previous year.
Otherwise, organic sales grew in three out of four market areas.
The outgoing CEO Borje Ekholm said, “We are taking near-term actions across the businesses, including commercial measures, for example, product substitution, as well as supply chain actions and targeted cost initiatives,” on a conference call.
CFO Lars Sandström warned there would be more restructuring, including layoffs, during the rest of the year.
Detecting drones, no 6G required
In its earnings report, Ericsson made much of its drone detection demo earlier this week with AT&T at the AT&T Stadium in Arlington, Texas (pictured), which used network sensing over a 5G network. The companies said this showed capabilities anticpated with 6G systems are already viable.
The stadium is in use during the FIFA Men’s World Cup. During the exercise, the network detected and located multiple drones and tracked their movement, illustrating how wireless infrastructure could help protect major venues, critical infrastructure and other key locations.
Ericsson says the same underlying capabilities could detect low altitude threats and track them at major venues, public spaces and in “other complex environments”, presumably such as defence.
Using existing cellular towers, Ericsson deployed Massive MIMOs across multiple sites, creating a multi-static sensing configuration. It combined sensing-enabled radio transmissions with signal processing and AI-enabled sensing algorithms to detect, locate and track the drones in real time using the radio signals normally used for comms.
In the demonstration, multiple drones flew at altitudes between 300 and 400 feet (approx 30 to almost 40 metres).
“As networks evolve, the opportunity is not just to prepare for 6G someday, but to begin introducing important building blocks now,” said Dyon Agnew, SVP and Head of Customer Unit AT&T, Ericsson Americas. “This demonstration with AT&T shows a product roadmap in action: using advanced 5G capabilities today to explore how sensing and connectivity can work together, then evolving those capabilities over time as the path to 6G becomes clearer.”
First Chief Legal Officer
Ericsson Federal Technologies Group has appointed Melissa Milstead as its first Chief Legal Officer. Formerly she was head of compliance for the Americas for the Ericsson group. She has two decades’ experience in government contracting, compliance, ethics, investigations and risk management. She is to lead Ericsson Federal’s legal affairs and compliance unit and serve as corporate secretary.
