October 18, 2016 — Ericsson’s third quarter 2016 results will be significantly lower than company expectations, as profits plummeted 94 percent. An earnings warning last week caused the company’s stock to drop 20 percent, and it has almost been halved in the last 12 months.
Negative industry trends from the first half of the year have further accelerated, primarily in Segment Networks, according to Jan Frykhammar, president and CEO. The sales decline was mainly driven by weak markets, such as Brazil, Russia and the Middle East. In addition, capacity sales in Europe were lower following completion of mobile broadband projects in 2015.
Frykhammer said the current trends are expected to continue short-term, which will lead to more cost cutting at the carrier.
“Continued progress in our cost reduction programs did not offset the lower sales and gross margin,” he said. “We will continue to drive the ongoing cost program and implement further reductions in cost of sales to meet the lower sales volumes.”