Thats All, Hoax

Image source:

What's going on?

Ericsson reported better-than-expected earnings on Friday thanks to a particularly successful and wait suspiciously coronavirus-adjacent 5G rollout.

What does this mean?

Theres been a rush to upgrade mobile networks to new, faster 5G technology lately, which has turned Ericssons mobile networking equipment into the hot ticket about town. Throw in the business its poaching off Nokia and Huawei, and youve got the recipe for expectation-busting results. Its even earning more from every sale too: the company reported a jump in its profit margin, hitting its goal two years early.

Still, the company didnt let itself get carried away: it opted not to up its forecasts for 2022. Thats grated on at least one activist investor, which said the company should aim higher after nailing last quarter. So now it might not matter if Ericsson beats its targets: investors like the activist will sell off their shares if it falls short of their own expectations.

Why should I care?

Zooming in: Politics and business dont mix.

Maybe Ericssons right to be cautious. See, Swedens banned Chinese companies from building 5G networks, and those political restrictions along with plenty of others are hampering rival Huawei. Thats good news for Ericsson in the short term, sure, but theres no guarantee that China which makes up 8% of the companys sales wont retaliate in kind

The bigger picture: Europe might be wasting its opportunity.

5G networks are seen as critical infrastructure by most governments, and key to modernizing factories, transport, and healthcare. But new research out late last week showed that only a quarter of Europeans could connect to a 5G network as of September last year. Thats up from the 13% of users in 2019, but a long way off the 76% of 5G-connected Americans (tweet this). As for why, its as simple as it is complicated: Europes so fragmented and its regulations so inconsistent that the return on 5G investments is a lot lower.

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next


Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.