Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) Q2 2023 Earnings Call Transcript

But ultimately, if you’re going to deliver customer service, I think you, for example, you would like to have connectivity most of the time. But if you run out in a network where you have capacity constraints, you may see bars on your device. But in reality, you have no data connectivity. That’s typically when you have — when you’re starting to run out of capacity or you simply cannot make a phone call. I think in our day and age, we are not going to be happy with that and we would expect a better service as a user. And that’s ultimately what’s going to drive the demand.

Peter Nyquist: Thanks, Börje. You had a second question as well, Alexander?

Alexander Duval: Yes. Greatly appreciate the clarification. Just a quick second one. You talked in your release about the fourth quarter being seasonally strong from a margin perspective, and just wanted to understand all of the factors that feed into that. Obviously, you talk about a RAN market, which is now weaker according to the release, both on a global basis and in North America, which is a very profitable market. But at the same time, you’re talking about normal seasonality in Q3 on top line. So that would imply worse than normal seasonality in Q4. So I just wanted to understand what are the factors that sort of give you comfort there? You just referenced, for example, the fact that there won’t be as much of an adjustment in inventory. But I’m wondering if there are other factors that give you confidence.

Peter Nyquist: Carl?

Carl Mellander: That is one, for sure, the inventory adjustments where that depletion is coming to an end and normalizing. But we see also a mix effect here in Q4. This is the traditional seasonality we see. Also, it’s a better mix of business, typically in the fourth quarter. It depends on, of course, how customers — what spending patterns customers have and so on. But we always see that improvement in the fourth quarter. It’s about how projects are concluded and how we deliver to customers to close the year. So we typically see that inventory is one thing and then the normal seasonality of our entire industry. And as long as I’ve been working here, we’ve always seen a stronger Q4 many, many years.

Peter Nyquist: Okay. Thanks. Thanks, Alex, for the question. Then we’ll move further in the queue here. And I’ll see — I have the next question from Andreas Joelsson at Danske Bank.

Andreas Joelsson: Maybe a slight shift in the questions, looking into the Enterprise side. If you could explain a little bit more the reception you have got from this, the strategy that you have in this area from your customers, especially in the U.S. but also how to leverage this portfolio outside the U.S. Any comment on pipeline and if we can expect this, the growth that you have now, to continue also for the coming quarters, that would be great.

Peter Nyquist: Börje?

Borje Ekholm: Maybe we divide it into the 2 components. So Enterprise Wireless Solutions continues to have a good growth rate. Of course, a little bit tougher market conditions due to the general economy, I will say. But we see also a very strong development with a strong pipeline of products that we are bringing to the market now. We’re still in the, I would say, in the early phases of building up our go-to-market organization there. We will, of course, pace that with sales. So it’s not about increasing the cost, per se, but we’re still not getting the full efficiency of our sales force on the Enterprise side. But we see a very good collaboration with our CSP customers, and they are actually very excited about bringing these type of products to the market as it drives revenues for them as well.