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Ericsson Q3 sees fall in North American sales, more cost cuts

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Mobile telecom equipment maker Ericsson on Friday said sales in its biggest market, North America, declined in the third quarter, highlighting the depth of its crisis following its profit warning last week.

[STOCKHOLM] Mobile telecom equipment maker Ericsson on Friday said sales in its biggest market, North America, declined in the third quarter, highlighting the depth of its crisis following its profit warning last week.

The company, the world's biggest maker of mobile network equipment, also said it would introduce further cost-cutting to deal with a weaker mobile broadband market.

The 8 per cent fall in North American sales was mainly due to one customer's reduction in investments in mobile broadband, the company said. Year-on-year sales in Europe, India and mainland China also all declined.

"The negative industry trends from the first half of 2016 have further accelerated, impacting Q3 sales, primarily relating to mobile broadband," acting CEO Jan Frykhammar said in a statement.

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"The decline, in both mobile broadband coverage and capacity sales, was particularly strong in markets with a weak macro-economic environment," he added.

Ericsson shocked investors last week when it issued the profit warning - reporting an expected 94 per cent plunge in quarterly operating profit and tumbling sales.

The Swedish company is struggling with a drop in spending by telecoms companies, with new 5G technology still years away, and stiff competition from Finland's Nokia and China's Huawei.

Added to its troubles, the company has been without a permanent CEO since ousting Hans Vestberg in July. The company could try to hire a chief executive with no track record in the telecoms industry after looking beyond the obvious candidates.

Having been slower to cut costs than recently merged rivals Nokia and Alcatel Lucent, Ericsson has since announced plans to axe thousands of jobs, but analysts said third-quarter results showed the challenges facing the firm as it looks for a new leader.

Ericsson's operating profit in the quarter fell to 0.3 billion crowns (S$50 million) from 5.1 billion crowns a year ago, a 93 per cent fall, while sales dropped 14 per cent to 51.1 billion, the company confirmed on Friday.

REUTERS

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