Ericsson Q3 profits fall 43%
Ericsson, the world's largest maker of mobile-phone networks, reported a 43 per cent decline in third-quarter profit as wireless operators curbed spending in a sputtering economy.
Net income fell to 2.18 billion kronor (€250 million) from 3.82 billion kronor, Stockholm-based Ericsson said today in a statement.
Gross margin, or the percentage of sales remaining after production costs, slid to 30.4 per cent from 35 per cent, missing the average estimate of 32.2 per cent.
Wireless carriers are cutting back on network investments as a slowing economy and competition hurt subscriber growth and margins.
To counter that, Ericsson is trying to sell more services such as network management and maintenance.
"We see a continued macroeconomic slowdown and political unrest in parts of the world, which has led to more cautious operator spending in some parts of the world," chief executive officer Hans Vestberg said in the statement.
Sales declined 1.7 per cent to 54.6 billion kronor, compared with an estimate of 54.8 billion kronor.
The business mix, with a higher proportion of projects to add coverage, is expected to remain at the current level in the short term, Ericsson said.
Modernisation deals in Europe, which demand more labour hours and are often less profitable, led to Ericsson's gross margin plunging to 30.2 per cent in the fourth quarter last year, the lowest level since at least 1989.
In March, Ericsson trimmed its sales-growth outlook, saying it expects compound growth of between 2 per cent to 8 per cent through 2014.
Ericsson said October 23 the third-quarter operating loss at ST-Ericsson, the chipmaking joint venture with STMicroelectronics, narrowed to $174 million from $224 million a year earlier.
Revenue slipped 13 per cent to $359 million and the company predicted it will remain at that level in the last three months of the year.