There has been a lot of activities in the network infrastructure and 4G deployment field and Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) has been in the think of events. The company however is still grappling with the challenge of low subscripting to mobile broadband plus and overall weak demand. The infrastructure company has on several occasions repeated manufacturing and earning misses, sinking the company’s profitability as well a declining revenue collection. This has left many investors high and dry. The stock has gone down by 8% over the past six months as opposed to the industry’s gain of 2.2%.
Many of the troubles that the company is facing have emanated from huge investments by leading makers of telecom equipment around the world. In particular, there is a lot of uncertainty in the financial markets, a decline in consumer spending in the telecom market plus a delay in auctions of spectrums. All these have put a lot of pressure and threat to Ericsson. The company’s margins and revenue in the Network and IT sectors are continually shrinking and moving away from normal market trends.
In the third quarter of 2017, the company recorded a big drop in its earnings as a result of dull legacy products sales, lower software sales and declining product demand. The company reported a net loss of SEK 4.3 billion ($528.5 million), compared to SEK 0.2 billion that was reported in the previous financial year. The telecommunication company has reported losses in four consecutive quarters.
Going into the futures, the company says it is expecting a single-digit decline in the market for radio access network in the current financial year. This is in fact worse than the figure that was projected previously. Sales from network equipment especially in Europe and North America have continually dropped. Latin America and Europe, the markets with the largest effect are also expected to go through a challenging investment environment in the coming quarters.
The company in overall is expecting unfavorable market trends as well as business mix to persist in the current financial year.