Ericsson third-quarter core profit beats forecasts as margins rise

October 21, 2020

STOCKHOLM (Reuters) – Sweden’s Ericsson on Wednesday reported quarterly core earnings that beat market estimates, helped by higher margins across its businesses, and said it was “more confident” in meeting its 2020 targets.

Ericsson’s 5G contract wins have touched 112 as more telecom operators are rolling out the next-generation network and as diplomatic pressure from the United States is pushing out China’s Huawei from more countries.

Third-quarter adjusted operating earnings rose to 9.0 billion Swedish crowns ($1.0 billion) from 6.5 billion a year ago, beating the mean forecast of 6.98 billion crowns, according to Refinitiv estimates.

Total revenue rose 1% to 57.5 billion crowns.

“While the pandemic has hurt revenues for several of our customers, and in some cases this has led to a reduction of capex, we have not seen any negative impact on our business, largely due to footprint gains,” Chief Executive Borje Ekholm said in a statement.

The group’s gross margin, excluding restructuring charges, rose to 43.2% in the third quarter from 37.8% in the year-ago period.

Ericsson said contracts in China have developed according to plan, contributing to profits in the third quarter and are expected to improve further.

Unlike its Nordic rival Nokia, Sweden-based Ericsson has won contracts from all three major operators in China to supply radio equipment for 5G networks.

However, a decision by the Swedish government to block China’s Huawei and ZTE from domestic 5G networks may lead to a catch-22 situation for Ericsson. While it may win some more share in Sweden’s network infrastructure, the risk of a retaliation by China looms large.

China’s telecom regulator issued a notice on Tuesday calling for strengthening of supervision of foreign-invested telecom companies in the country.

(Reporting by Supantha Mukherjee and Helena Soderpalm; editing by Niklas Pollard and Kim Coghill)

Exclusive: Australian writer detained in Beijing told supporter he was a former Chinese spy

October 21, 2020

By Kirsty Needham and Cate Cadell

SYDNEY/SHANGHAI (Reuters) – Yang Hengjun, an Australian writer detained in Beijing and facing trial for espionage on behalf of a country China hasn’t publicly named was a former Chinese spy, according to a confidential letter he wrote to a supporter in 2011.

In the detailed letter he wrote to his former teacher, which was reviewed by Reuters, Yang revealed he had worked for China’s Ministry of State Security for a decade from 1989, including in Hong Kong and Washington, before moving to Australia.

The 55-year-old, who became a well-known pro-democracy blogger, faces 10 years or more in jail after Chinese authorities charged him with endangering national security by joining or accepting a mission from the unidentified espionage organisation, said Feng Chongyi, the Sydney-based liberal scholar who Yang sent the letter to.

Yang has previously proclaimed his innocence, saying last month: “I will never confess to something I haven’t done.”    

Feng revealed the letter’s details about Yang’s past as a Chinese spy for the first time, which had been rumoured in overseas Chinese dissident circles, as a preemptive move to counter potential misinformation at Yang’s trial over spying for another country.

Reuters was unable to independently verify Yang’s claim that he spied for China and some other details of his letter.

China’s Ministry of Foreign Affairs referred Reuters to a statement it made on Oct 12, when a spokesman confirmed Yang had been indicted on charges of espionage on Oct 7, and that the first hearing of the case was underway.

“Relevant Chinese authorities are handling the case in strict accordance with the law and Yang Jun’s legal rights are fully protected,” spokesman Zhao Lijian said at the time, referring to his Yang’s legal name.

The Australian government referred Reuters to Foreign Affairs Minister Marise Payne’s statement last week that Australia has seen no evidence to support the charge of espionage against Yang.

Yang’s Beijing lawyers have been forbidden from speaking about the trial to media by Chinese authorities.

The case underscores what Yang’s supporters describe as a crackdown on liberal voices in China since 2016 under President Xi Jinping and comes at a time when diplomatic relations between Australia and China are already at a low ebb.


Yang generated a strong following online more than a decade ago after writing hundreds of articles about Chinese, American and Taiwanese politics.

He was first detained in China in 2011 by police on suspicion of being an instigator of Beijing’s Jasmine Revolution – short-lived protests spurred by online democracy activists. He was released after three days following interventions by the Australian government.

In his May 2011 letter to Feng, Yang denied he was behind the protests and said he told police he worked for the MSS after 1989.

According to his letter, Yang worked for the MSS in Hong Kong from 1992 until the city’s handover from Britain to China in 1997, and then in Washington.

Yang’s cover in Hong Kong was at a travel service, while in Washington he worked as a think-tank researcher, Feng said, though the letter didn’t refer to these activities. 

China’s foreign ministry did not immediately respond to a further request for comment about Yang’s work for MSS in Hong Kong and Washington.

Yang asked the Guangzhou police interrogating him in 2011 to contact the MSS to confirm his identity, but also told them he didn’t need permission to write publicly about Chinese democracy because he had left the security agency years earlier.

“I have changed my mind and discovered a better way to patriotism. That is to promote China’s social progress and political system reform to achieve democratic modernization, not just being a spy,” he told them, according to the letter.

A person answering the phone at the Guangzhou Municipal Public Security Bureau on Wednesday said he was unaware of the case and the office did not immediately respond to a faxed request seeking confirmation of Yang’s detention and questioning in 2011.

Yang had quit the MSS when he migrated to Australia in 1999 to follow his family, and became an Australian citizen in 2002, said Feng, who supervised Yang’s PhD studies at Sydney’s University of Technology in 2006.


Yang spent the next four years writing spy novels.

The three novels, published in Taiwan, are about a double agent, also surnamed Yang. In his 2004 novel, Finishing Stroke, the CIA director, U.S. president and Taiwan’s president are embroiled in a plot line about tensions in the Taiwan Strait.

During his 2011 detention, police had demanded to know how Yang could write the novels without divulging state secrets, according to Yang’s written account.

“I know the boundary between love of country and treason,” he replied, according to the 13-page letter.

In addition to the letter, another source confirmed he told close friends of his MSS history after his 2011 detention.

After his three day detention in 2011, he was detained again by police entering China from New York in January 2019.  


Feng said he believed Yang’s detention was linked to a national police crackdown on “foreign interference” reported by state media in the same month.

“In 2019, he was suspected of being a person with the potential of organising Colour Revolution,” said Feng, referring to pro-democracy protest movements sometimes linked by critics to U.S. or Western interests, without providing more specifics.

China’s foreign ministry did not respond to requests for comment on the details of Yang’s arrest.

Yang was living in New York in 2019 as a visiting scholar at Columbia University who supplemented his income by working as a “daigou” or online shopping agent for Chinese consumers wanting American products.

“Yang Hengjun is being punished for his publications criticising human rights abuses and other malpractice of the (Chinese Communist Party) in China, and for promoting China’s transition to introducing democracy,” said Feng, who was himself detained by security police in Guangzhou in 2017.


The Australian government has raised serious concerns about Yang’s treatment during his 21 months in detention, saying he had been shackled at times last year, interrogated for extended periods, with limited access to lawyers and unable to see his wife. She is only allowed to pass a message to her husband through consular officials on a narrow range of topics.

Yang’s wife Yuan Xiaoliang, who spoke to Reuters in Shanghai about their relationship but not Yang’s case or his MSS past, said Yang would not betray his family and readers in China.

She also expressed concern for her husband’s health, noting he had lost weight and that Australian consular officers who visited him last year told her they observed he was shaking as he walked while in detention.

“I once hoped that they would let him go. But now it seems impossible,” said Yuan, who has been granted a permanent resident visa by Australia, but is prevented by authorities from leaving China. “I am worried that he will not be able to survive.”

(Reporting by Kirsty Needham in Sydney and Cate Cadell in Shanghai; Editing by Lincoln Feast)

PAINE IN THE MORNING: 8 things you need to know this Wednesday – October 21st 2020 (LISTEN)

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Nestle raises full-year guidance after third-quarter sales beats poll

October 21, 2020

ZURICH (Reuters) – Nestle <NESN.S> raised its guidance for organic sales growth to around 3% for 2020 on Wednesday after posting better-than-expected growth of 4.9% for the third quarter driven by strong demand for pet food and health products.

The world’s biggest food group has weathered the COVID-19 pandemic better than some of its peers thanks to its broad portfolio, with resilient pet food and health businesses making up for a slump in food sales to restaurants and cafes.

For the first nine months of the year, the maker of Nescafe coffee and KitKat chocolate said its organic sales grew by 3.5%, compared to analysts’ average estimate for 2.8%, according to a company-supplied consensus.

(Reporting by Silke Koltrowitz, editing by John Revill)