Nokia, Ericsson Warn of Margin Pressures; Shares Fall

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 [e-mail]; @sabelaojeaguix

(END) Dow Jones Newswires

October 20, 2022 14:07 ET (18:07 GMT)

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