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Ericsson shares down as profits plummet

Swedish telecommunications equipment maker Ericsson posted on Wednesday a sharp drop in its second-quarter profit owing in part to weaker network sales and challenges to its ST-Ericsson mobile platform unit.

Ericsson shares down as profits plummet

Net profit dropped by 63 percent from the same period a year earlier to 1.205 billion kronor ($173 million), well below an average analyst forecast of 1.67 billion kronor compiled by Dow Jones Newswires.

Overall sales gained a slight 1.0 percent to 55.3 billion kronor, a statement said.

“Demand for global services and support solutions was strong, while networks sales decreased year-on-year mainly due to the expected decline in CDMA equipment sales as well as lower business activity in China,” it quoted Ericsson president and chief executive Hans Vestberg as saying.

He referred to an older mobile telephone transmission technology that is giving way to newer ones.

Russian sales were also lower, Vestberg said.

In addition, “our joint venture ST-Ericsson is still in a challenging situation due to a significant drop in sales of new products to one of the largest customers and continued decline in legacy products,” the Ericsson boss said.

ST-Ericsson, which is jointly owned by Ericsson and the Franco-Italian semi-conductor manufacturer STMicroelectronics, lost $318 million in the second quarter, an increase of 44 percent on the loss it posted a year ago.

Ericsson also reported billing delays that hurt its bottom line, but did not provide details.

Despite the negative results, Vestberg remained bullish on Ericsson’s long-term prospects due to the expected increase in demand for data-heavy smartphones.

“Today there are more than 700 million smartphone subscriptions and according to our estimates this number will increase to three billion in 2017,” he said in a statement.

“Based on these drivers, we see an increasing focus from our customers on network performance and quality of service. This will require continuous operator investments in hardware, software and services.”

AFP/The Local

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SWEDEN AND UKRAINE

Ericsson suspends all Russia operations indefinitely

Swedish network equipment maker Ericsson said Monday that it was suspending all of its Russian operations over the war in Ukraine for the foreseeable future.

Ericsson suspends all Russia operations indefinitely

The telecom giant already announced in late February that it would stop all deliveries to Russia following Moscow’s February 24 invasion of Ukraine.

“In the light of recent events and of European Union sanctions, the company will now suspend its affected business with customers in Russia indefinitely,” Ericsson said in a statement.

The company added that it was “engaging with customers and partners regarding the indefinite suspension of the affected business.”

“The priority is to focus on the safety and well-being of Ericsson employees in Russia and they will be placed on paid leave,” it said.

READ ALSO: How has Sweden responded to Putin’s war in Ukraine so far?

Hundreds of Western firms ranging from Ikea to Coca-Cola, Goldman Sachs and McDonald’s have stopped operations in the country since the invasion, with French banking group Societe Generale announcing Monday it was selling its stake in Russia’s Rosbank.

Ericsson has around 600 employees in Russia, and is a “major supplier to the largest operator MTS and the fourth largest operator Tele2,” a company spokeswoman told AFP, adding that together with Ukraine, Russia accounts for less than two percent of revenue.

As a result, the equipment maker said it would record a provision for 900 million Swedish kronor ($95 million, 87 million euros) for the first quarter of 2022 for “impairment of assets and other exceptional costs,” though no staff redundancy costs were included.
Ericsson is due to publish its first quarter earnings on April 14.

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