Ericsson swings to $180.9m Q4 loss

telecomasia.net

Ericsson swung to a 1.6 billion kronor ($180.9 million) net loss during the fourth quarter as a result of a slowing telecoms equipment market and fierce competition from rivals Huawei and Nokia.

Revenues for the quarter fell 11% year-on-year to 5.5 billion kronor despite strong sequential sales growth in Ericsson's networks segment.

Gross margin fell to 26.1%, or 29.4% excluding the impact of restructuring charges, down from 36.3% and 36.6% respectively in the same quarter a year earlier. Ericsson expects restructuring charges of around 3 billion kronor in 2017.

For the full year 2016, net income slumped to 1.9 billion kronor, from 13.7 billion kronor in 2015. Net sales also fell 10% in constant currency to 222.6 billion kronor.

“The negative industry trends remained in the fourth quarter. However, sales were positively impacted by favorable currency exchange rates combined with hardware deliveries, previously planned for Q1 2017,” Ericsson president and CEO Börje Ekholm commented.

“Profitability declined year-on-year following lower IPR licensing revenues mainly due to last year's agreement with Apple as well as increased restructuring charges.”

In response to the swing to a loss, Ericsson will slash its proposed dividend for 2016 to 1 kronor a share, down from 3.70 kronor in 2015, and will also indefinitely halt its long-running employee stock program.

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