Ericsson struggles with global industry downturn

AP News
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Posted: Jan 26, 2017 9:46 AM

HELSINKI (AP) — Swedish mobile networks company Ericsson continued to be plagued by a global downturn in the industry, reporting a fourth-quarter net loss of 1.6 billion kronor ($181 million), mainly due to a decline in broadband investments and licensing revenues.

The Stockholm-based company said Thursday it fell to a loss from a net profit of 7 billion kronor in the same period in 2015, as sales dropped 11 percent to 65 billion kronor.

It was the second consecutive poor quarterly result for the company.

"The negative industry trends remained in the fourth quarter," CEO Borje Ekholm said.

He noted that sales were helped by currency exchange rates and hardware deliveries that had been previously planned for the first quarter of this year.

Ekholm, who took over last week as president and chief executive officer of one of the world's leading network providers, acknowledged that the company was experiencing "a period of rapid change" forcing it to review its operations.

"Emphasis will be on refining the strategy to focus investments into areas where we both can and must win," he said. "This means prioritizing profitability over growth, but also to diligently continue to work on efficiency and effectiveness across all operations."

The company said it was "tracking toward target" on its savings target of 9 billion kronor in 2017.

In July, Hans Vestberg was ousted as CEO as Ericsson struggled to improve earnings amid tightening competition. He was temporarily replaced by the chief financial officer, Jan Frykhammar, before the October announcement that Ekholm would take over in January.

Ericsson's share price was up about 2 percent at 53.05 kronor in afternoon trading in Stockholm.