Ericsson shares slide as profits nosedive

Swedish telecom equipment maker Ericsson reported on Friday a 42-percent drop in net profit in the third quarter as it ran into difficulties in the European and Asian markets.

Ericsson shares slide as profits nosedive

Net profit came in at 2.18 billion kronor ($325 million), much higher than the 1.42 billion forecast by analysts surveyed by Dow Jones Newswires.

Sales slipped by two percent to 55.5 billion kronor, in line with expectations.

Ericsson’s share price was down by 4.63 percent in midday trading in Stockholm, on a market down 0.76 percent.

Ericsson said it had experienced “weaker sales in parts of Europe, China, Korea and Russia” as well as a continued decline in sales of its CDMA equipment, used for mobile phone transmissions.

In North America, where the economy was seen as improving, network sales developed “favorably” as mobile phone operators invest in extending their network coverage.

But Ericsson is suffering from having signed contracts offering low margins just to maintain market share. Its gross margin plunged to 30.4 percent in the third quarter, from 35 percent a year earlier.

In addition, “we see a continued macroeconomic slow down and political unrest in parts of the world, which has led to more cautious operator spending in some parts of the world,” chief executive Hans Vestberg said in a statement.

Nonetheless, he was optimistic and said he believed “the fundamentals for longer-term positive development for the industry remain solid.”

“There are now one billion smartphones in the world and the number is expected to reach three billion in 2017,” he added.

AFP/The Local

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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.