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Ericsson crash on profits warning

October 18, 2007

Having apparently been outperforming many of its rivals dust during the past year and a half, the world's leading telecommunications equipment maker issued a sales and profit warning. It said its operating profit for the third quarter of 2007 was expected to be down 36 per cent compared with the same period last year. It also said its fourth quarter would show declining operating margins year-on-year.

The statement stunned the markets and immedialtely lead to speculation abouot the CEO Carl-Henric Svanberg's future. “This is a time to be humble and to reflect and think about where we can improve,” said Svanberg, who became Ericsson's chief executive in 2003 and led the company back to profitability after theTMT recession. Ericsson lost $15 billion (E10.5bn) or a quarter from its market capitalisation.

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