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Ericsson earnings hit by North America slowdown

JONATHAN NACKSTRAND/Stringer | AFP/Getty Images | AFP

Swedish telecoms network equipment maker Ericsson reported weaker-than-expected fourth-quarter earnings due to a drop in investment by telecoms operators in North America.

But Ericsson's North American decline was offset by growth in the Middle East, Europe and Asia, the company said in a statement on Tuesday.

Net income came in at 4.2 billion Swedish krone in the fourth quarter of 2014, below analysts' forecasts of 4.56 billion krone, and a 35 percent decline in the 6.4 billion krone reported in the same period last year.

"Sales in North America were mainly driven by operator investments in capacity and quality enhancements also this quarter, although at a slower pace," CEO Hans Vestberg said in a statement.

He added that the North American mobile broadband business would also remain slow in the short-term.

Ericsson reported net sales of 68 billion Swedish krone, below forecasts of 70 billion krone, and a 1 percent decline from the fourth quarter of 2013.

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The full year results for 2014 showed gross margin rising to 36.2 percent from 33.6 percent in 2013.

Ericsson announced a cost-cutting plan in November 2014 in an attempt to stave off competition from rivals such as Nokia and China's Huawei. It said it will look to save 9 billion Swedish krone by 2017. The company said it was looking at restructuring charges of 3 to 4 billion Swedish krone in 2015.