Ericsson is expected to fall on the markets today after report poorer than expected resultsWednesday, 25 January 2012
Telecom Company, Ericsson's fourth-quarter results was well below analysts' expectations. The disappointment over its lower profitability would surely leads to some obliteration of its shares on the market today.
Ericsson made a profit of Skr1.8 billion during the fourth quarter. According analysts consensuses, it was below expectations of an average of Skr6 billion. That was thus a real fall.
AdvertisementIn the Market, in early trading the company fell flat on the stock exchange. After only ten minutes of trading, Skr28 billion of Ericsson's market capitalization was erased. The shares fell more than 14 percent, and just after 9 o'clock, it shares stood at the lowest level in three years.
According to Ericsson, 2011 was a year of strong sales growth of 12percent, and sales for comparable units, adjusted for currency exchange rate effects and hedging, increased 19percent. In spite of weak JV results, net income increased Skr 1.3 billion to Skr12.6 billion, driven by higher sales and lower restructuring charges. The Board of Directors proposes a dividend for 2011 of Skr 2.50 (2.25), an increase by 11percent.
The company's profit is burdened in particular by a low growth on the network side. Ericsson explains the evolution of the operators in North America and Russia has led to low investment than before.
Robert Jakobsen, analyst at Jyske Bank, said that he also sees the decline as logical.
"It's hard to find something positive in this report. It is very disappointing and lowered apparently by that telecom companies reducing their investments. The company has indicated a slowdown, but this is much worse than expected. It becomes a big event, ”he told Reuters.
An anonymous analyst report describes as "pretty awful"
"They missed both revenue and gross margin. Expectations had clearly come down in recent weeks, but this is even worse than the most pessimistic expectations, " said the analyst to Reuters.
What do you think about the above article? Please leave us a comment and reaction. Thank you.