L.M. Ericsson stock is down nearly 3% to $22.07 on news that the company’s networks business lost momentum in the final months of the year. The company reported $886.7 million in profits last quarter, a 42% decline from the year-ago period.
President and CEO Carl-Henric Svanberg said the company experienced “significant market erosion” on infrastructure and network build outs.
“The continued rapid buildout of mobile communications in emerging markets and our significant market share gains have resulted in a higher proportion of new network builds with initial lower margins,” he said. “At the same time, we have seen a decline in network expansions and upgrades in mature markets. All this is resulting in a lower margin.”
Network sales declined by 4% from the year-ago quarter and grew by just 1% for the full year.
Svanberg also reported that political unrest in some emerging markets, and a continued weakened U.S. dollar, affected Ericsson. About half of the company’s sales are affected by U.S. currency value fluctuations.
“For 2008 we find it prudent to plan for a flattish mobile infrastructure market,” he concluded.
The company also reported that it will cut about 1,000 jobs in Sweden as it positions itself for what it sees as a relatively flat market.
“(Last year) was characterized by large mergers and industry consolidation among operators. This creates short-term disruptions as well as market opportunities,” the company reported.
Ericsson cuts jobs as momentum slows
ABOUT AUTHOR
