Analysts and media said there was now a crisis of confidence in Ericsson.
The company’s share price was down 1.69 percent at 19.76 kronor in midday trade on the Stockholm stock exchange, after a plunge of 24 percent on Tuesday that saw more than 100 billion kronor ($15 billion dollars) of investors’ money go up in smoke.
Ericsson announced Tuesday that its earnings would be sharply lower than expected in the third quarter due to a weakening market that was seen continuing through 2008.
It said investments in mobile network expansions and upgrades, which bring in more money that new rollouts, were slowing down.
“The unexpected development in the quarter is mainly due to a shortfall in sales in mobile network upgrades and expansions which resulted in an unfavourable business mix that also negatively affected group margins,” Ericsson’s chief executive Carl-Henric Svanberg said Tuesday.
The announcement came just a month after the company had reiterated its rosy forecasts at a capital markets day event.
Leading daily Dagens Nyheter headlined “Confidence in Ericsson rocked by announcement.”
“Confidence is zero,” analyst Greger Johansson at Redeye told financial daily Dagens Industri.
“Partly because Ericsson’s management stood there just one month ago and spoke in only positive terms and partly because they either don’t know what’s going on or they choose not to communicate,” he said.
“At Ericsson, which is so focused on costs, management should have been aware of this information,” said analyst Helena Nordman Knutsson at Öhmans investment bank.
Svanberg admitted that he “deserved” to be criticized.
“We should be able to better understand how the market can change from quarter to quarter,” he said.
He insisted however that he had no plans to resign.
“No, I haven’t considered that at all, I get a lot of joy and inspiration from managing Ericsson,” he told Dagens Industri.