Sweden's Ericsson reported a worse than expected second-quarter loss on Tuesday and lowered its forecast for the mobile infrastructure market, blaming persistent low investment by telecoms companies. Silvia Antonioli reports
Not a good day for Ericsson. Shares in the Swedish firm took a dive after it slashed its 2017 outlook and posted heavier losses than expected. (SOUNDBITE) (Swedish) ERICSSON CEO BORJE EKHOLM, SAYING: "We've seen a tough market. Our sales are down about 13 per cent if you adjust for currencies. Our clients are investing a little less and they try to put off investments to the future and that affects us." The mobile telecom equipment maker is battling aggressive competition from rival Nokia and Huawei. And more importantly the battleground is shrinking: telecoms firms are spending less while demand for the latest 5G technology is still years away. SOUNDBITE (English) JAMES HUGHES, CHIEF MARKET ANALYST, GKFX "Despite launching into other areas and launching new devices and trying to really change the way the business works it really does seem that not much is working and it doesn't seem like there is much light at the end of the tunnel at the moment." The company is trying to stage a recovery. It stunned investors earlier this year by announcing 1.7 billion dollars in writedowns and restructuring costs. It's slashed jobs and is cutting costs to the bone but investors still fear this is too little too late. (SOUNDBITE) (Swedish) ERICSSON CEO BORJE EKHOLM, SAYING: "Our ambition and our goal is to build a stronger Ericsson, built on technology and product leadership. This demands increased investment in research and development and increased efforts in that area to eventually create a competitive portfolio. To finance this and to create a satisfactory profitability we have to fix the cost side. But the firm now sees the mobile infrastructure market, one of the sectors it has moved into more recently, falling by a high single-digit percentage this year compared with its earlier guidance of a 2-to-6 percent decline. And a turnaround in a falling market is by no means an easy task.