By Supantha Mukherjee
STOCKHOLM (Reuters) -Ericsson on Tuesday said it expected the uncertainty impacting its mobile networks business to persist into 2024, after reporting a fall in third-quarter revenue as demand for 5G equipment fell in North America.
The Swedish telecom equipment maker's shares fell 9% in early trade to lows last seen in 2017, when the company was going through another downturn.
Ericsson (BS:ERICAs), which pre-announced its results last week and took a $2.9 billion impairment charge on its Vonage acquisition, said it expects current quarter results to be similar to the third quarter.
"We are not going to guide for 2024 specifically, because the timing of the recovery of the market is uncertain," Chief Financial Officer Carl Mellander told Reuters.
Gear makers such as Ericsson and Nokia (NYSE:NOK) have been hit by a slowdown in spending by telecoms companies.
Mellander said the company had increased its previously announced 2023 cost saving target of 11 billion Swedish crowns ($1.01 billion), including the laying off 8,500 employees, to 12 billion crowns.
"We have proven that cost cutting is something we are good at...should the market and our financial performance require it, we can do more," he said.
Jefferies analysts said they expect a gradual improvement in market conditions and ongoing cost reduction to slowly improve overall profitability in the coming quarters.
Networks organic sales in North America were down by 60% from last year as telecoms customers adjusted their inventory and were slower to roll out new equipment. North America now accounts for 23% of Ericsson's sales compared with 48% earlier.
India has been a rare growth area with sales quadrupling to about 10 billion crowns, but that is expected to slow down next year.
"We have built out at absolute record speed and some of the 2024 volumes have been preponed into 2023...volumes will come down in 2024 in India," Mellander said.
Ericsson has seen growth returning in the Middle East, however.
"While near-term dynamics are uncertain, we are convinced that the recovery will come," CEO Borje Ekholm said in a statement.
($1 = 10.9410 Swedish crowns)