Downbeat Ericsson shocks market

Having issued a surprise profits warning only last month, the leading cellular infrastructure supplier, Ericsson, has again caused a market upset by revealing that sales for the remainder of the year would be at the very bottom of expectations.

If this was not enough, the newly appointed CFO, Hans Vestberg, said there would also be pressure on margins in the coming quarters because of the cost of building new networks. However, he said that margins should recover by the second half of next year or the beginning of 2009.

The reason behind this latest warning, according to Ericsson, is that the markets in America and Europe had become much tougher and performance had also been affected by political unrest in some of its emerging markets.

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