Will Revenue Contraction Affect Ericsson's Q3 Earnings Results?

Core Viewpoint - Ericsson is expected to report a decline in revenues for Q3 2024 due to reduced network investments in various regions, although demand in North America and cost optimization efforts may provide some support [2][10]. Financial Performance Expectations - The Zacks Consensus Estimate for total revenues in Q3 2024 is $5.73 billion, down from $5.96 billion in the same quarter last year [10]. - The adjusted earnings per share estimate is 9 cents, an increase from 7 cents reported in the prior-year quarter [10]. - Revenue estimates for the Networks segment are SEK 38.09 billion, reflecting an 8.3% year-over-year decline [11]. - The Cloud Software and Services segment is expected to generate SEK 15.8 billion, indicating a 1.5% year-over-year increase [11]. - The Enterprise business revenue estimate stands at SEK 5.45 billion, suggesting an 18.9% year-over-year reduction [11]. Key Developments - Ericsson signed a multi-year global patent cross-license agreement with OPPO, which is likely to support net sales during the quarter [3]. - Turkcell Communication and Spark New Zealand Limited deployed Ericsson's advanced technologies, which are expected to enhance performance in Q3 [4]. - A significant milestone was achieved in mobile connectivity through collaboration with Telstra, improving network capacity and energy efficiency [5]. - Vonage, a subsidiary of Ericsson, partnered with SAP to explore generative AI use cases, which may positively impact upcoming results [6]. - Ericsson agreed to divest its U.S.-based telecommunications solution provider, iconectiv, for approximately $1 billion, expected to close in the first half of 2025 [8][9]. Market Challenges - Constrained spending from operators in certain regions and increased competition in the wireless equipment market are anticipated to hinder net sales [7]. - Ongoing geopolitical unrest remains a significant concern for the company [7].