IT Blog

STOCKHOLM (Reuters) – Ericsson expects to take a second-quarter writedown of about 1 billion crowns ($109 million) on product inventory in China, the Swedish telecoms gear maker said on Monday.

The company, which has won 5G contracts from three major operators in China, said it expected negative gross margins in China in the quarter reflecting the high initial costs for new products.

Ericsson had warned in its first-quarter report that an increasing share of strategic contracts would hurt profitability in the second quarter, primarily due to negative gross margins in China.

Ericsson shares, which have gained 7% this year, were down 2.2% in early trade.

China’s three largest telecom operators – China Mobile, China Telecom and China Unicom – have awarded 5G contracts worth billions of dollars this year, mostly to Huawei and ZTE, according to media reports….