Top Stories
Top Stories

Ericsson sees fall in North American sales, more cost cuts

Sweden's Ericsson said sales in its biggest market, North America, had declined in the third quarter, highlighting the depth of the mobile telecom equipment maker's crisis following its profit warning last week.

The company, the world's biggest maker of mobile network equipment, also said it would introduce further cost-cutting to deal with a weaker mobile broadband market.

Ericsson shocked investors last week when it issued the profit warning -- indicating a plunge of more than 90 percent in quarterly operating profit and tumbling sales.

Photographer | Collection | Getty Images

The Swedish company is struggling with a drop in spending by telecoms companies, with new 5G technology still years away, and stiff competition from Finland's Nokia and China's Huawei.

The 8 percent reduction in North American sales was the second consecutive quarter of falls and was worse than expected, according to a SEB research note.

That decline was mainly due to lower sales in Professional Services and one customer's lower spending on mobile broadband, the company said, without giving details. Professional Services is the business that supports and helps maintain networks.

Ericsson shares, which plunged 15 percent on last week's profit warning, traded 2 percent lower at 46.80 crowns by 0720 GMT.

Year-on-year sales declined in most regions, including Europe, India and mainland China - with the only exception being South East Asia and Oceania. But the company blamed the overall weak global market.

"In our view we have not lost market share, but this is market driven," acting CEO Jan Frykhammar told Reuters.

"We will implement further short-term actions mainly to reduce cost of sales, in order to adapt our operations to weaker mobile broadband demand," he added in a separate statement.

Added to its troubles, the company has been without a permanent CEO since ousting Hans Vestberg in July.

The company could try to hire a chief executive with no track record in the telecoms industry after looking beyond the obvious candidates. [

Having been slower to cut costs than recently merged rivals Nokia and Alcatel Lucent, Ericsson has since announced plans to axe thousands of jobs, but analysts said third-quarter results showed the challenges facing the firm as it looks for a new leader.

Ericsson's operating profit in the quarter fell to 0.3 billion crowns from 5.1 billion crowns a year ago, a 93 percent fall, while sales dropped 14 percent to 51.1 billion, the company confirmed on Friday.

Follow CNBC International on Twitter and Facebook.