Ericsson on Wednesday reported its first quarterly operating profit since the fall of 2016 as its results beat analysts’ expectations for the April through June reporting period.
The Swedish telecom equipment giant, which slashed thousands of jobs and overhauled its management team during a prolonged downturn in the segment, disclosed a second-quarter operating margin of 0.3 percent.
Its adjusted gross margin, meanwhile, reached 36.7 percent; Bloomberg reported that analysts predicted the closely watched metric would hit just more than 35 percent.
“It’s been tons of hard work in the company, but it is rewarding to see that hard work now paying off,” President and CEO Börje Ekholm said on the company’s earnings call, according to a transcript.
The results prompted another jump in the company’s stock price, which also rose in April after stronger-than-expected results prompted Ericsson officials to declare its long-term strategy was “starting to pay off.”
Ekholm said the company has achieved its savings target of more than $1.1 billion — in part by implementing net layoffs in excess of 20,000 in recent years — and was optimistic it would hit its operating margin goal of 10 percent by 2020.
The global telecom equipment sector struggled in recent years as the market for 4G gear matured and operators waited to invest in next-generation equipment. Ekholm said Wednesday that carriers are now interested in equipment that can be ready for 5G networks with a software upgrade.
“We see good growth in North America and that’s really on the back of our customers getting ready for 5G and actually preparing the network,” Ekholm said.