Ethernity Networks Limited (LON:ENET) shares jumped on Monday as the AIM-listed firm predicted that an upswing in 5G deployment will help it achieve “positive cash flow generation” in 2021.
In a trading update for the year ended 31 December, the company, which develops technology to help reduce pressure on computer processors and networks, said it expects revenues to be 20% ahead of the previous year while costs in the second half of the year had fallen by 5% compared to the first half.
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Looking ahead, Ethernity expects to receive orders for new design projects from its existing customers in the second quarter of 2020, although anticipated contracts with tier one original equipment manufacturers (OEMs) expected to close in the first two months of the year had been delayed due to “issues outside the company’s control”.
The company also said it was seeing “growing demand” from Chinese telecoms firms for its solutions based on FPGA, a unique enabling circuit for 5G mobile internet, and was working with several major Chinese OEMs to integrate its products with their networks.
Chief executive David Levi added that the application of the company’s software represented “a long-term revenue opportunity of significantly more value to the Company than IP or project business opportunities”.
The shares were 4.4% higher at 47.5p in early trading.