Ericsson warns of 94% dive in profit as sales fall

Ericsson is grappling with weak demand for its mobile network equipment in developed markets

Shares in Ericsson have dived after the Swedish telecoms company warned profits would be down by 94% for the third quarter.

The stock slumped 16.7% in morning trading, wiping billions of dollars off the firm's market value.

Ericsson is struggling with weak demand for its mobile network equipment and fierce competition in some markets.

It said quarterly income fell to 300m Swedish krona ($34.8 million) from 5.1bn krona a year ago.

Sales slipped 14% to 51.1bn krona.

Ericsson's acting chief executive, Jan Frykhammar, 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.

"More in-depth analysis remains to be done but current trends are expected to continue short-term."

Challenging times

It follows a challenging period for the firm which has missed analysts' forecasts for five consecutive quarters.

The firm - which is the world's biggest maker of mobile network equipment - has seen sales fall in regions with struggling economies such as Brazil, Russia and the Middle East.

However, its sales in Europe were also hit due to the completion of mobile broadband projects in 2015.

The firm announced last week it would cut 3,000 jobs in Sweden - about a fifth of its workforce in that country - after being criticised for not acting quickly enough to tackle its problems.

The business has around 115,000 employees worldwide.

It has also been without a permanent chief executive since July when Hans Vestberg stepped down following criticism over his leadership and pay.