The Swedish Ericsson, a manufacturer of telecommunication equipment, reported a fall in quarterly operating profit by 94% and reduced sales of its key division – the network.
Ericsson is struggling with weak demand for mobile network equipment in the developed markets and stiff competition from the Finnish Nokia and China's Huawei.
In a statement, the Swedish company said that operating profit in the third quarter fell to 300 million kronor ($ 34.8 million) from 5.1 billion kroner a year earlier, including a restructuring charge of $ 1.3 billion kronor.
Sales fell 14% to 51.1 billion kronor, while sales in the key network division fell almost 20%.
Analysts expected an operating profit of 4.3 billion crowns and sales of $ 53.6 billion.
"Our results are significantly lower than those we expected, given the extremely weak end of the quarter, and given the fact that we had previously reported a development of the market situation", - said the acting CEO of Ericsson, Jan Frykhammar.
"It is still necessary to carry out more in-depth analysis, but the current trend is expected to continue in the short term", - he said.
Ericsson said that the decline in sales is mainly due to performance in markets with weak macroeconomic environment, such as Brazil, Russia and the Middle East. Sales in Europe also decreased due to the completion of mobile broadband network projects in 2015.
The share price of the Swedish Ericsson fell more than 17%.
This message caused the decline in prices of other securities of the industry, including Nokia Oyj (HE: NOKIA), which lost 5.4%.
As for the European stock market, the indexes were down during Wednesday session. The composite index of the largest companies in the region Stoxx Europe 600 fell 0.08% to 339.89 points. The index of 50 largest enterprises of the Eurozone – Euro Stoxx 50 fell 0.17%, the British FTSE 100 fell 0.4%, the French CAC 40 dropped by 0.42%, and the DAX German lost 0.13%.