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Ericsson's profit tumbles 71% in Q3
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Ericsson's net profit in the third quarter fell 71 percent. A constellation of factors--declining sales, losses at Sony Ericsson, intense competition and restructuring--contributed to the Swedish vendor's weak performance.
The company had a net profit of $118 million, down from $413 million in the year-ago quarter. Ericsson CEO Carl-Henric Svanberg, who is leaving the company at year-end, said that Ericsson picked up market share in the quarter. However, sales were down to $6.75 billion, off 6 percent from $7.15 billion in the third quarter last year. Both the profit and sales figures fell short of analyst's expectations.
"We said (nine months ago) that it's unreasonable to think we won't get affected," Svanberg said, according to Reuters. He added that the drop in sales was due to cutbacks operators had made earlier. "Now of course I think everybody understands that we are on our way into safer territory, but ... it takes a while before operators start planning projects and start getting projects on board again for us."
Ericsson's earnings also were hit by $392.6 million in restructuring charges, as well as a $145.4 million loss from its Sony Ericsson joint venture. Ericsson is nearing the end of a $1.45 billion cost-cutting program, which will be extended, according to CFO Hans Vestberg. Vestberg is taking over the reins of the company from Svanberg.
Ericsson said its network margins were stable, and that its services margins remained stable, despite start-up costs associated with recent contracts, including a managed services contract with Sprint Nextel. Ericsson took over the day-to-day operations of Sprint's networks in late September.
For more:
- see FierceWireless' Q3 earnings page
- see this release
- see this Reuters article
- see this WSJ article (sub. req.)
Related Articles:
Report: Ericsson division to cut purchasing expenses by 50%
Ericsson takes over Sprint's day-to-day operations
Dell'Oro: Ericsson outpaces rivals
Ericsson posts lower profit, sees weak economy continuing
Comments
Posted by Anonymous | November 1, 2009 - 9:33pm
HEY ERICSSON...Are you listening? The problem has always been management with Sprint Nextel and for us to be profitable you should start firing the management you just got from Sprint.
THE NAME HAS CHANGE BUT THE SAME MORONS THAT DROVE SPRINT INTO THE GROUND ARE NOW GOING TO RUN ERICSSON INTO THE GROUND!
As far as I am concerned (being an Ericsson Employee now) I still work for Sprint Nextel because the same managers and directors are still running the show and we once again will fail! Ericsson you took over a losing team and there is no way to make this new team a winner with the leadership that is still in place. REPLACE THEM ASAP!!!
I am not the only one that feels this way, many of us feel this way, including my own manager! Are you listening ERICSSON?
Lets be a winning team and start by getting rid of all the bloated management that has bogged us down and toss the directors and install new ones from "out side" the company! Just don't do what Sprint Nextel did which was to shuffle the managers and directors around instead of firing them like they should have done. Ericsson I beg you, do the right thing, FIRE and or REPLACE the current management and the directors starting today! If you do this we Ericsson will be number one and a winning team, if you don't, well just look at Sprint Nextel because that is where you are headed!
Sprint Nextel refused to make this hard call, step to the place Ericsson!
Read more: http://www.fiercewireless.com/story/ericsson-takes-over-sprints-day-day-operations/2009-09-18#ixzz0VfMBVoMJ
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