Swedish telecoms giant Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) dialed all the wrong numbers on Wednesday, sending its shares tumbling.
The company said its third quarter figures would be significantly lower than expected, as negative industry trends seen in the first half of the year had continued and worsened in the second half.
The company also cited weaker demand for its mobile broadband services.
The flagship of the Swedish technology sector said sales in the third quarter were down 14% year-on-year to 51.1bn kroner from SEK59.2bn the year before, while the gross margin deteriorated to 28% from 34%.
Worse still, the company expects the current trends will continue, at least in the short term.
“Our result is significantly lower than we expected, with a particularly weak end of the quarter, and deviates from what we previously have communicated regarding market development,” said Jan Frykhammar, who is both president and chief executive officer of the group.
“The negative industry trends have further accelerated affecting primarily Segment Networks. Continued progress in our cost reduction programs did not offset the lower sales and gross margin. 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,” Frykhammar pledged.
Ericsson's shares were down 19% at US$5.69 in the first hour of trading on Nasdaq.