Ericsson plans more cost cuts as shares plunge after poor Q2

July 18, 2017 by Matti Huuhtanen

Ericsson shares plunged more than 15 percent Tuesday after the Swedish mobile networks company posted a second-quarter loss on falling sales and warned that there was unlikely to be any improvement soon.

Hit by a decline in networks and software sales, Ericsson's net loss in the period was 1 billion kronor ($120 million), a marked deterioration from last year's equivalent of a 1.6 billion-kronor profit. Overall sales slumped 8 percent to 50 billion kronor.

The scale of the loss prompted some acute selling of Ericsson shares, which closed down 15.5 percent at 51.45 kronor in Stockholm.

"Ericsson sees a worse market than what it had expected," said Daniel Djurberg, analyst at Handelsbanken. "We see weaknesses in most markets and tough competition."

Ericsson's CEO Borje Ekholm said he was not satisfied with the company's underlying performance and warned of "an increased risk of further market and customer project adjustments, which would have a negative impact on results." He said they were estimated to at between 3 to 5 billion kronor during the next 12 months, and that Ericsson would accelerate its cost savings program to deliver annual cost savings of at least 10 billion kronor by the middle of 2018.

"One key component in our focused business strategy is to reduce costs and increase efficiency," Ekholm said. "In light of the current market outlook, we will accelerate our actions to ensure that we can meet our target of doubling the 2016 operating margin beyond 2018."

He pointed out some bright spots and that the company's increased investments in research and development, such as in the radio systems division, are beginning to bear fruit.

Explore further: Ericsson steps up cost-cutting as profit hit by poor demand

Related Stories

Ericsson steps up cost-cutting as profit hit by poor demand

July 19, 2016

Wireless equipment maker Ericsson says lower demand for mobile broadband in a weakening global economy caused second-quarter profit to drop 26 percent and sales to slump in most markets. It predicted little improvement for ...

Ericsson's profits rise 49 percent, but sales down

April 21, 2016

Networks maker Ericsson's profits jumped 49 percent in the first quarter but the results were lower than expected and the company announced a shakeup of its leadership structure to drive growth.

Ericsson shares plummet after it warns on profit and outlook

October 12, 2016

Mobile networks company Ericsson saw its share price plummet by almost a fifth on Wednesday after saying that its third quarter earnings this year will be "significantly lower" than expectations and it predicts no improvement ...

Ericsson profit down 10 pct despite higher sales

October 24, 2014

Wireless equipment maker Ericsson says its third-quarter earnings slumped 10 percent despite higher sales due to increased operating costs and negative effects from currency hedging.

Ericsson cuts 3,000 jobs in Sweden, reduces operations

October 4, 2016

Ericsson said Tuesday it will cut 3,000 jobs in Sweden, or nearly 20 percent of its local workforce, and will downsize operations at several plants as part of its global plan to cut costs by 9 billion kronor ($1 billion) ...

Recommended for you

The powerful meteor that no one saw (except satellites)

March 19, 2019

At precisely 11:48 am on December 18, 2018, a large space rock heading straight for Earth at a speed of 19 miles per second exploded into a vast ball of fire as it entered the atmosphere, 15.9 miles above the Bering Sea.

OSIRIS-REx reveals asteroid Bennu has big surprises

March 19, 2019

A NASA spacecraft that will return a sample of a near-Earth asteroid named Bennu to Earth in 2023 made the first-ever close-up observations of particle plumes erupting from an asteroid's surface. Bennu also revealed itself ...

Nanoscale Lamb wave-driven motors in nonliquid environments

March 19, 2019

Light driven movement is challenging in nonliquid environments as micro-sized objects can experience strong dry adhesion to contact surfaces and resist movement. In a recent study, Jinsheng Lu and co-workers at the College ...

Revealing the rules behind virus scaffold construction

March 19, 2019

A team of researchers including Northwestern Engineering faculty has expanded the understanding of how virus shells self-assemble, an important step toward developing techniques that use viruses as vehicles to deliver targeted ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.