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Ericsson suffers in North America

Friday, October 21, 2016 - 01:43

More woes for Sweden's Ericsson as the mobile telco equipment maker announces sales in its biggest market, North America, declined in the third quarter. As David Pollard reports, more cost-cutting lies ahead.

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If it was tough at the top for Ericsson, the way down is proving tougher. The Swedish telecom equipment maker now capping a dramatic profit warning with more bad news. Sales in North America, its biggest market, are down eight per cent in the last three months. Last week, it warned of a 90 per cent plunge in operating profit. South-East Asia and Oceania the only exceptions to a bleak global sales report. (SOUNDBITE) (English) CMC MARKETS ANALYST, JASPER LAWLER, SAYING: "The diversification of its portfolio, which is diverse and should protect them from falling industry trends, just so happens to be in a situation where all of them are markets that are, as they describe them, troubled at the moment. And I don't think it's something specifically Ericsson can control - it's purely the industries that they are part of." Telcos are spending less and Ericsson does face stiff competition from Nokia and Huawei. Some analysts also see problems with Ericsson itself. US mobile network Sprint Corp renegotiated a contract in July - cutting its value by half. Ericsson's also been without a permanent CEO since ousting Hans Vestberg in the same month - although it's thought it may be on the point of naming a new one, possibly within days. But others say: time will tell. (SOUNDBITE) (English) CMC MARKETS ANALYST, JASPER LAWLER, SAYING: "I don't think this is a persistent trend that means Ericsson are down and out. I think this is just purely that they have to rein in the costs of their production and wait for a better market environment." Ericsson shares hit an 8-year low after this latest update - after losing 20 per cent on last week's profits warning. After a swathe of job cuts, it also warned of more cost-cutting to come.

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Ericsson suffers in North America

Friday, October 21, 2016 - 01:43