More misery for Ericsson as losses pile up

Swedish telecoms giant Ericsson has delivered more bad news after it reported losses in the third quarter of 2016, with a net loss of 233 million kronor ($26 million) in the period.

More misery for Ericsson as losses pile up
Ericsson interim CEO Jan Frykhammar presenting its third quarter results. Photo: Claudio Bresciani/TT

Results were down by almost five billion kronor ($562 million) compared to the same time last year.

“It doesn’t look very good and nor can you be particularly optimistic about the future. There are going to be some more quarters ahead that are really tough for Ericsson,” Nordnet savings economist Joakim Bornold told Swedish news agency TT.

Ericsson’s shares fell by four percent in morning trading, after previously tumbling 20 percent earlier in October when it warned investors results would be worse than the 3.1 billion kronor net profit it earned in the July to September quarter of 2015.

“Negative industry trends from the first half of 2016 have further accelerated, impacting Q3 sales, primarily relating to mobile broadband,” interim CEO Jan Frykhammar explained in a statement on Friday.

It has been a particularly grim month for the telecoms company, who started October by confirming it plans on cutting 3000 jobs in Sweden as part of the next phase of a major savings program which kicked off earlier this year.

And Nordnet economist Bornold said he doesn’t think the cuts will be the last:

“They have announced a major savings package, but I don’t think that will be enough. Rather, there will be more. Ericsson is going to need to review their operations further.”

Ericsson sacked CEO Hans Vestberg in July after seven years in the job, during which time the company had struggled against competition from rivals Nokia, Siemens and Alcatel-Lucent.

At the start of the summer its shares plunged when reports in a Swedish newspaper claimed revenue figures had been exaggerated.