Ericsson says telecoms uncertainty to persist into 2024, shares fall
Reuters
Published Oct 17, 2023 06:14
Updated Oct 17, 2023 16:33
By Supantha Mukherjee
STOCKHOLM (Reuters) -Ericsson on Tuesday said it expected the uncertainty impacting its mobile networks business to persist into 2024, after reporting a fall in third-quarter revenue as demand for 5G equipment fell in North America.
The Swedish telecom equipment maker's shares fell 9% in early trade to lows last seen in 2017, when the company was going through another downturn.
Ericsson (BS:ERICAs), which pre-announced its results last week and took a $2.9 billion impairment charge on its Vonage acquisition, said it expects current quarter results to be similar to the third quarter.
"We are not going to guide for 2024 specifically, because the timing of the recovery of the market is uncertain," Chief Financial Officer Carl Mellander told Reuters.
Gear makers such as Ericsson and Nokia (HE:NOKIA) have been hit by a slowdown in spending by telecoms companies.
Mellander said the company had increased its previously announced 2023 cost saving target of 11 billion Swedish crowns ($1.01 billion), including the laying off 8,500 employees, to 12 billion crowns.
"We have proven that cost cutting is something we are good at...should the market and our financial performance require it, we can do more," he said.
Jefferies analysts said they expect a gradual improvement in market conditions and ongoing cost reduction to slowly improve overall profitability in the coming quarters.
Networks organic sales in North America were down by 60% from last year as telecoms customers adjusted their inventory and were slower to roll out new equipment. North America now accounts for 23% of Ericsson's sales compared with 48% earlier.
India has been a rare growth area with sales quadrupling to about 10 billion crowns, but that is expected to slow down next year.
"We have built out at absolute record speed and some of the 2024 volumes have been preponed into 2023...volumes will come down in 2024 in India," Mellander said.
Ericsson has seen growth returning in the Middle East, however.
"While near-term dynamics are uncertain, we are convinced that the recovery will come," CEO Borje Ekholm said in a statement.
($1 = 10.9410 Swedish crowns)
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.