Ericsson Q3, 2016 revenue declined by 14 per cent YoY to SEK 51.1 billion, driven by slower development in networks where sales declined by -19 percent.
The weaker demand for mobile broadband, especially in markets with weak macro-economic environment, have further accelerated Ericsson's revenue decline.
Ericsson's gross margin declined to 28 per cent following lower volumes in networks, lower mobile broadband capacity sales, and higher share of services sales.
The sales decline was mainly driven by markets with weak macro-economic environment such as Brazil, Russia and the Middle East, impacting both coverage and capacity sales in those markets. In addition, capacity sales in Europe were lower following completion of mobile broadband projects in 2015.
Jan Frykhammar, president and CEO said, "Our result is significantly lower than we expected, with a particularly weak end of the quarter, and deviates from what we previously have communicated regarding market development. The negative industry trends have further accelerated affecting primarily networks. Continued progress in our cost reduction programs did not offset the lower sales and gross margin."
"More in-depth analysis remains to be done but current trends are expected to continue short-term. We will continue to drive the ongoing cost program and implement further reductions in cost of sales to meet the lower sales volume," added Frykhammar.
