Ericsson and Nokia both posted weaker-than-expected results in the third quarter, weighing heavily on the shares of the two largest European telecoms equipment makers amid a worsening outlook for industry across the region.
Sweden’s Ericsson was hit hardest as its shares fell 14 per cent in trading on Thursday to a two-year low, coming close to their lowest level since 2018. Finland’s Nokia also suffered as its shares dropped 5 per cent as investors worried about delays in signing new patents and licensing deals with telecoms groups.
‘Swamp of losses’
Ericsson’s results were “clearly disappointing”, said Esbjörn Lundevall, chief equity strategist at Swedish bank SEB, while one of its leading shareholders and Europe’s largest activist investor, Cevian Capital, said of the Swedish group that “the swamp of losses must be removed as soon as possible”.
Underlying operating profit in the third quarter fell 19 per cent compared with a year earlier to 7.2 billion Swedish krona (€654 million) at Ericsson, well below analysts’ average forecast of SKr8.5 billion, according to Bloomberg estimates.
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Meanwhile, Nokia’s operating profit rose 4 per cent from a year earlier to €658 million, below an average analyst forecast of €703 million. Mr Lundevall said Nokia, whose shares have doubled since March 2020, was in better shape, but there were questions about when disputes with Chinese handset makers Oppo and Vivo would be resolved. –Copyright The Financial Times Limited 2022
