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Ericsson swung to a loss of 200 million kronor ($22.4 million) in the third quarter as a result of weaker sales, particularly in the networks segment.
The net loss – which marked a reversal from a 3.1 billion kronor net income in the third quarter – can be attributed to a number of negative industry trends impacting demand, according to Ericsson.
Reported sales declined 14% year-on-year to 51.1 billion kronor, with network segment revenues down 19% due to weaker demand for mobile broadband.
Gross margins also shrank significantly – from 33.9% to 28.3% – as a result of the decline in demand for network equipment in comparison to the lower-margin services segment.
“The negative industry trends from the first half of 2016 have further accelerated, impacting Q3 sales, primarily relating to mobile broadband…The current industry trends indicate a somewhat weaker than normal seasonal sales growth between the third and fourth quarters,” Ericsson president and CEO Jan Frykhammar said.
“In addition a renewed managed services contract in North America, with reduced scope, will impact sales negatively. The current business mix of coverage and capacity sales in mobile broadband is anticipated to prevail in the short term.”
