(Bloomberg) -- Ericsson AB’s shares plummeted the most in 18 months after the Swedish mobile equipment provider reported weak sales in Asia and losses in non-core units.
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Adjusted earnings before interest and taxes were 9.8 billion Swedish kronor ($894 million) in the fourth quarter, up 33% from a year earlier, the Stockholm-based company said in a statement on Friday. That compared to an average of 10.3 billion kronor forecast by analysts surveyed by Bloomberg. Adjusted operating margin was 13.4%, compared to an average estimate of 14.03%.
Ericsson shares fell as much as 10%, the biggest intraday drop since July 2023, and were down 8.2% to 89.64 kronor at 11:14 a.m. in Stockholm.
Ericsson and its Nordic competitor Nokia Oyj, which reports results next week, are contending with a weak market for telecom equipment that has lasted for years as many operators delay expensive network upgrades. It has responded with cost-cutting measures and a pivot to markets such as the US and India. The moves have been welcomed by investors, with shares rallying 48% in the last year even after Friday’s selloff.
While revenue rose slightly in Ericsson’s core network business last quarter, earnings were dragged down by its enterprise segment, losses in its media businesses, and a one-time impairment in its Ericsson Ventures unit.
Chief Executive Officer Börje Ekholm said he is increasingly confident the outlook for Ericsson’s core business is improving.
“The overall market continued to be quite challenging,” Ekholm told investors on Friday. “However, today we’re starting to see some very positive indications, and we have further reasons to believe that the overall market is starting to stabilize.”
The market for radio access networks, or RAN, may improve slightly in the short term, but “the long term outlook remains subdued” over the next five years, the Dell’Oro Group, which tracks the telecom industry, said in a report on Friday.
Ericsson’s net sales increased 1% to 72.9 billion kronor in the fourth quarter from a year earlier, driven by adjusted growth of 54% in North America. Business there was buoyed by a $14 billion contract with US operator AT&T Inc. that began to pay off in the previous period. Revenue in Europe and Latin America also rose, while other markets, including Asia, declined significantly.