Ericsson fell to a larger-than-expected third-quarter operating loss on Friday and warned its quarter-on-quarter sales growth would underperform, adding to an already bleak outlook for the mobile telecom equipment maker.
Competition from China's Huawei and Finland's Nokia as well as weak emerging markets and falling spending by telecoms operators has hurt Ericsson while demand for next-generation 5G technology is still several years away.
Once the clear sector leader, it is also having to restructure after an ill-judged attempt to diversify its customer base outside the telecom market to include sectors such as the media and utilities.
Ericsson posted its fourth consecutive losing quarter, slipping to a operating loss of 4.8 billion crowns (USD 588.7 million), compared to a mean forecast for a loss of 3.5 billion in a Reuters poll of analysts.
Sales at Ericsson, one of the top global mobile networks equipment makers, were 47.8 billion crowns versus a consensus forecast of 47.5 billion, Its gross margin excluding restructuring charges came in at 30.0 percent versus the 29.8 percent seen by analysts.
Restructuring weighed on the quarter as the company repeated it aimed to reduce costs by at least 10 billion Swedish crowns from the middle of next year.
It is also renegotiating or exiting unprofitable service contracts in its networks unit as it aims to double its operating margin to 12 percent after 2018 from 6 percent in 2016, a target analysts see as unlikely.
The market remains tough and its network unit's sales would be impacted in the fourth quarter, it said.
"Sequential sales increase between Q3 and Q4 is expected to be lower than normal seasonality driven by decreased 4G investments levels in mainland China, primarily impacting Networks," the company said in a statement. – Money Control