Ericsson hit by tough market conditions
Swedish telecom giant Ericsson plunged on the Stockholm exchange after posting a disappointing third-quarter result.
| Related news: • Sony Ericsson reports widening losses |
Ericsson, the world's leading mobile phone network provider, said its third-quarter net profit fell on heavy restructuring charges and losses at handset joint-venture Sony Ericsson while network equipment declined due to lower demand in the current tougher market environment.
The company's stock share fell heavily on the Stockholm exchange in the opening trade. After five minutes the share is down more than 8 percent.
The Stockholm-based telecom giant reported net profit of 810 million kronor ($118 million) for the third quarter, down from 2.84 billion kronor a year earlier. The result was below analysts' expectations for 1.65 billion kronor.
"This wasn't exactly a hit. It is first and foremost systems sales and professional services that are clearly worse than expected," Greger Johansson, analyst at Redeye, told Reuters.
The company’s sale fell 6 percent to 46.43 billion kronor while operating profit fell to 1.14 billion kronor, both figures below expectations.
Last week Nokia Siemens Networks posted falling third-quarter sales – but said it now expects mobile infrastructure market to fall only 5 percent this year from previous expectations for a 10 percent drop.
Also Ericsson's chief executive officer Carl Henrik Svanberg, who leaves the firm at the end of the year, has a general positive outlook in the long perspective.
"While the current economic environment affects all parts of society the longer-term fundamentals for our industry remain solid", he said in the report. "We are well positioned to lead our industry forward".
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Last Updated (Thursday, 22 October 2009 08:20)
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