Swedish Telecom machinery maker Ericsson to cut more costs to lower expenses if needed.
Ericsson has said that it may cut more costs in order to reduce expenses after quarterly operating profit on Wednesday 27th February 2016. Ericsson met forecasts for quarterly operating profit after lower expenses, sales recovery in China and patent fees.
The demand in its biggest markets shifted from building new next-generation networks to upgrades of existing capacity.
Ericsson is already facing tough competition from its rival Finnish network equipment Nokia (Former Nokia Siemens Network) and Alcatel-Lucent (merged with Nokia) which are aiming to drive higher sales growth with increased profit margins in 2016.
Ericsson is playing joint venture game with network giant Cisco Systems instead of acquiring either Cisco or any other larger acquisitions.
While many analysts are worried as for Nokia-Alcatel Lucent merging will show more attractiveness than telecom operators as it will have a strong grip in fixed-line data communications.
Ericsson has said that it will do more cuts to save USD 1.1 billion (equivalent to 9 billion Swedish crowns) by 2017. Ericsson CEO Hans Vestberg told a conference call,
Our preparedness is much higher if we need to do more.
No Growth (Zero Growth)
Sentat Asset Management fund manager Inge Heydorn said
I think we will see some tough years ahead, and they should be happy with zero growth.
Ericsson shares fell by 5.5 percent on 1127 GMT (6:27 a.m. ET) with no growth in sight for core business & no firm targets for more savings.
Ericsson Operating profit compared to 2014 (6.3 billion crowns) was 11.0 billion crowns which above a mean forecast of 10.6 billion crowns.