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Ericsson shares plunge after it issues profit warning, weak broadband demand

Ericssons CEO Jan Frykhammar speaks during a news conference on October 4, 2016 at the company's head office in Stockholm, Sweden.
Maya Suslin | AFP | Getty Images
Ericssons CEO Jan Frykhammar speaks during a news conference on October 4, 2016 at the company's head office in Stockholm, Sweden.

U.S.-listed shares of Ericsson shed nearly 21 percent Wednesday after the firm issued a profit warning.

The Sweden-based telecommunications company said on Wednesday its results for the third quarter will be "significantly lower" than it previously expected, citing weak mobile broadband demand, "especially in markets with weak macro-economic environment."

It also said capacity sales in Europe were lower after completing its broadband projects last year.

"Continued progress in our cost reduction programs did not offset the lower sales and gross margin," Jan Frykhammar, president and CEO, said in a statement.

"More in-depth analysis remains to be done but current trends are expected to continue short-term. We will continue to drive the ongoing cost program and implement further reductions in cost of sales to meet the lower sales volumes."

The company said its sales declined by 14 percent year over year. Its gross margin declined to 28 percent.

With Wednesday's losses, Ericsson's U.S.-listed stock has plunged more than 42 percent year to date.

ERIC 2016 Chart


— CNBC's Fred Imbert contributed to this report.