Ericsson Profit Down On Weak Mobile Broadband Sales; Initiates Further Cost Cuts

(RTTNews) - Swedish telecommunications operator Ericsson (ERIC) reported Tuesday that its second-quarter net income plunged 26 percent to 1.6 billion Swedish kronor from last year's 2.1 billion kronor. Earnings per share were 0.48 krona, down 25 percent from 0.64 krona last year.

Adjusted earnings per share were 0.83 krona, compared to 1.45 krona a year ago.

Net sales declined 11 percent to 54.1 billion kronor from 60.7 billion kronor a year ago. Sales, adjusted for comparable units and currency, decreased 7%.

Mobile broadband sales continued to decline particularly in markets impacted by a weak macro-economic environment.

Gross margin declined to 32.3% from 33.2% last year, mainly due to a larger share of mobile broadband coverage business with lower hardware margins, and a higher share of services business.

Hans Vestberg, President and CEO, said, "The negative industry trends from the first quarter have intensified impacting demand for mobile broadband, especially in markets with a weak macro-economic environment. We are delivering on ongoing cost reduction activities. However, in light of market development, management has, with the support of the Board of Directors, initiated significant actions to further reduce cost."

With these actions to further drive efficiency improvements and reduce cost, the company aims to manage the lower demand for mobile broadband investments.

The company said it targets a new annual run rate of operating expenses, excluding restructuring charges, of 53 billion kronor in the second half of 2017.