Ericsson posts $26M loss in Q3 as demand in North America wanes

Image: Ericsson

Shares of Ericsson continued to slide after the venerable gear vendor said waning sales in North America contributed to a $26 million quarterly loss.

The Swedish company posted a net quarterly loss of $26 million, marking its first loss in nearly four years. Ericsson last week warned that its third-quarter results would be “significantly lower” than it had hoped, citing a 14 percent year-over-year drop in sales that it blamed on negative industry trends.

“As anticipated, sales in North America declined, mainly due to lower sales in Professional Services,” the company said in a press release. “The current industry trends indicate a somewhat weaker than normal seasonal sales growth between the third and fourth quarters. In addition, a renewed managed services contract in North America, with reduced scope, will impact sales negatively.”

Sponsored by Nokia

Report: What do enterprise buyers really think about 5G?

New research from Nokia provides insights into enterprise buyer perceptions to help you develop a 5G go-to-market strategy that meets customer expectations. What do businesses expect to achieve with 5G? Which use cases do they find most valuable? What type of providers do they want to work with?

Indeed, Sprint earlier this year announced that it had renewed only parts of what had been a blockbuster seven-year, $5 billion managed services contract with Ericsson.

Ericsson, like its rivals in the industry, is finding that European operators have completed the 4G mobile broadband projects that they want to execute for now, reducing capacity sales there too. The company is not only suffering from the industry's general post-4G, pre-5G malaise. It is also under great pressure from rivals such as China's Huawei and Finland's Nokia, which recently bought Alcatel-Lucent.

The vendor announced earlier this month that it would slash 3,000 jobs in Sweden as it continues to struggle in a brutal worldwide market. In July, the company posted a net quarterly profit of $186 million, down from $240 million during the year-ago period. Sales fell to $6.3 billion, missing analysts' predictions of roughly $6.44 billion.

The company said the cost-cutting will continue as it positions itself for the emergence of 5G technologies.

“Ericsson is in the middle of a significant company transformation,” the firm said. “We will implement further short-term actions mainly to reduce cost of sales, in order to adapt our operations to weaker mobile broadband demand.”

Shares of Ericsson were down 5 percent in mid-day trading Friday.

Suggested Articles

Verizon is scaling Real Time Kinematics, halfway through a 2-year nationwide network deployment "with a critical mass of major markets" this year.

All the products launched by Samsung in recent weeks are based on Qualcomm's flagship Snapdragon 865 Plus mobile platform.

The wireless industry cheered the court’s decision because the FCC’s rules help them cut through a lot of local red tape.