Ericsson Announced Worse-than-Expected for the Second Quarter

Published on: 19 Jul, 2017

On Tuesday, Telefonaktiebolaget LM Ericsson (NASDAQ: ERIC), announced its financial results for the second quarter of 2017, with both sales and earnings missing estimates.

According to the Swedish company, net sales for the second quarter dropped 8% to $5.7 billion, missing estimates of $5.8 billion. The drop in sales was due to the weak broadband market, declining network sales and lower investment in parts of Europe, the Middle East & Africa, and Latin America. Gross Margin of the company was 29.8% in the second quarter, which was also below estimates of 30.2%. Adjusted operating margin reached 0.6%, missing estimates of 3.3%.

Earnings for the second quarter decreased from SEK 0.3 to SEK 0.17 per share, also missing estimates of SEK 0.33 per share.

“We are not satisfied with our underlying performance with continued declining sales and increasing losses in the quarter. Execution of our focused business strategy is gaining traction. However, in light of current market conditions, we are accelerating the planned actions to reduce costs,” Börje Ekholm, the President and CEO of the company, said in the statement on Tuesday.

Late in March, Börje Ekholm announced a restructuring plan to reduce costs and streamline the company’s focus areas. Most of the planned provisions, write-downs, and restructuring charges were already booked in the first quarter. In the report, Ekholm said that an uncertain market could eliminate around $600 million of operating income over the next year.

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