Ericsson Misses Q2 Earnings Consensus; Sees Further Full-Year Weakness

Ericsson Misses Q2 Earnings Consensus; Sees Further Full-Year Weakness

Ericsson Misses Q2 Earnings Consensus; Sees Further Full-Year Weakness

The telecoms equipment maker said it will bring forward cost cuts to total at least SEK10 billion by the middle of next year, the company said, and sees "an increased risk of further market and customer project adjustments" that could hit operating earnings by between SEK3 billion and SEK5 billion.

Mobile telecom equipment maker Ericsson reported a heavier than expected second-quarter loss today and lowered its mobile infrastructure market forecast, dealing a fresh blow to the Swedish firm as it tries to restore profitability. This is to be compared with the company's previous estimate of negative 2% to negative 6%.

"We are not satisfied with our underlying performance with continued declining sales and increasing losses in the quarter", said CEO Borje Ekholm, who took the helm of the group earlier this year.

"Due to technology and portfolio shifts we will reduce the capitalisation of product platform, software release development expenses and hardware costs". "Execution of our focused business strategy is gaining traction".

Ericsson planned to step up cost-cutting measures amid tougher market conditions, the statement read.

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Operating loss in the second quarter was 1.2 billion Swedish crowns ($145.3m), compared with a 2.8 billion profit a year earlier and a mean forecast for a 244m crown loss seen in a Reuters poll of analysts.

The company said year-on-year sales in the quarter declined 8% to SEK49.9 billion. Lower software sales within Networks can in part be explained by an unusually strong performance in the second quarter past year, but the company pointed out that investment levels within mobile broadband were cautious.

In Sweden, Ericsson shares were trading at 54.65 kronor, down 10.34 percent.

The company noted that the decline in the Networks result was mainly caused by lower software sales, reflecting prior year's unusually strong software sales and cautious mobile broadband investment levels.

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