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Ericsson's shares plummet as profits fail to meet expectations


Ericsson's shares plummet as profits fail to meet expectations


Shares in leading telecoms equipment maker Ericsson fell more than 28 percent in early trading, after it reported third quarter profits fell well short of expectations. The Chief Executive Officer Carl-Henric Svanberg said lower demand for network upgrades in North America and Europe hit margins and fourth-quarter revenue may also suffer.

“This is a day to be humble, concerned and disappointed. The unexpected development in the quarter is due in main to a shortfall in mobile network upgrades and expansions which resulted in an unfavourable network business mix that eroded group margins”, he said.

In the first quarter of 2007 the Swedish organisation reported profits of 835 million euros profits, then hit one billion in the 2nd only to plummet to 620 million in the third. The company’s multimedia business grew 31 percent from a year earlier and operating income was slightly above the breakeven level. Shares in rivals including Nokia and Alcatel-Lucent dropped as much as 4 percent.

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