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

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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.”

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.