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Problems in Europe, Asia force Ericsson's profits down
Swedish telecom equipment maker Ericsson reported a 42% drop in net profit in the third quarter amid increasing difficulties in the European and Asian markets.
Net profit came in at 2.18bn kronor ($325m), much higher than the 1.42bn kronor forecast by analysts surveyed by Dow Jones Newswires.
Sales slipped by 2% to 55.5bn kronor, in line with expectations.
Ericsson's share price was down by 4.63% in Stockholm.
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 improving, network sales developed "favourably" as mobile phone operators invested in extending their network coverage.
But Ericsson is suffering because it signed contracts offering low margins to maintain market share. Its gross margin fell to 30.4% in the third quarter from 35% 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 spending in some parts of the world," chief executive Hans Vestberg said in a statement.
Nonetheless, he believed "there are solid fundamentals for longer-term positive development of the industry."
"There are now one billion smartphones in the world and the number is expected to reach three billion in 2017," he added.
Source: AFP via I-Net Bridge
Source: I-Net Bridge
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