Ericsson revenue to dip 14 percent to $5.8 bn in Q3

Telecom network and software major Ericsson today said its revenue for Q3 2016 will dip 14 percent to SEK 51.1 billion or $5.79 billion, due to negative industry trends and weaker demand for mobile broadband.

The Swedish telecom technology company, which is looking for a new CEO as the replacement for Hans Vestberg who resigned in August, will be announcing its third quarter financial results on October 21.

Ericsson’s Networks business sales declined 19 percent to SEK 23.3 billion during the third quarter of the year. During Q3 2015, Ericsson’s Networks business contributed SEK 28.8 billion to total revenue of SEK 59.2 billion.

On quarter on quarter basis, Ericsson’s revenue slipped 6 percent, while network business sales fell 13 percent.

Gross margin of Ericsson declined to 28 percent from 34 percent because of lower volumes in Networks business, lower mobile broadband capacity sales, and higher share of services sales.

Ericsson said its operating income declined to SEK 0.3 billion, including restructuring charges of SEK 1.3 billion.
The sales decline was mainly driven by markets with weak macro-economic environment such as Brazil, Russia and the Middle East, impacting both coverage and capacity sales in those markets. In addition, capacity sales in Europe were lower following completion of mobile broadband projects in 2015.

Ericsson did not reveal any specific information about its revenue growth in India, one of the top 5 sales regions for the global telecom equipment supplier.

“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. The negative industry trends have further accelerated affecting primarily Segment Networks,” said Jan Frykhammar, president and CEO of Ericsson.

Baburajan K
editor@telecomlead.com