Nordic telecom giants Ericsson AB and Nokia Oyj yesterday reported lower-than-expected profits for the third quarter, sending their shares diving as the rivals expressed concerns about rising uncertainty in global markets.
Ericsson’s shares sank by more than 11 percent as the Stockholm stock exchange opened, while Nokia tumbled by 4 percent in Helsinki.
Sweden’s Ericsson reported a net profit of 5.4 billion Swedish kronor (US$480.9 million) from July to September, down 7 percent compared with a year earlier.
The profit was below analysts’ surveyed expectations of between 5.7 billion and 5.9 billion kronor.
The lower profits were partly due to Ericsson’s US$6.2 billion acquisition of US cloud communications company Vonage.
CEO Borje Ekholm said the company would “continue to be proactive in reviewing options to reduce costs.”
“Cost efficiency is also crucial to allow investments in technology leadership and to strengthen our resilience in an uncertain market,” Ekholm said in a statement, adding that Ericsson is making “pricing adjustments” as inflation soars worldwide.
Finnish competitor Nokia reported a 22 percent rise in profit to 428 million euros (US$418.85 million) — well short of the 514 to 539 million euros forecast by analysts.
Nokia CEO Pekka Lundmark said the quarter demonstrated that the company is “delivering on our ambition to accelerate growth,” but also said that uncertainty exists in the markets.
“As we start to look beyond 2022, we recognize the increasing macro and geopolitical uncertainty within which we operate,” Lundmark said.
Ericsson reported an increase in net sales to 68 billion kronor, up from 56.3 billion kronor the year before, while Nokia reported a 16 percent rise to 6.2 billion euros.
However, their sales were affected by their departures from Russia following the invasion of Ukraine.
Nokia’s net sales in Russia declined by about 70 million euros, while Ericsson said the withdrawal from the Russian market affected sales by 800 million kronor.
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