Ericsson’s recent announcement that it will not provide any guidance beyond the fourth quarter has left investors worried. Citing market uncertainty, the Swedish telecommunications supplier stated that the recovery of its mobile networks business is now “in our customers’ hands,” with current conditions expected to persist until 2024.
This delay in the recovery timeline is a stark contrast to what CEO Borje Ekholm had previously stated. In July, Ekholm expressed optimism for a gradual recovery in late 2023, followed by further improvement in 2024. However, the recent report on Ericsson’s third-quarter earnings reveals a different story.
The outlook for carrier spending has been a cause for concern for both Ericsson and its rival Nokia. In July, both companies issued warnings about the impact of high inflation and rising interest rates on customer spending plans. This, in turn, led to losses across the industry’s supply chain, affecting companies such as AT&T, Verizon, and T-Mobile.
Ericsson’s organic sales in its networks business in North America have suffered a significant decline of 60% year-over-year, albeit from a record quarter in 2022. As a result, Ericsson stock experienced a sharp drop of 7.6% in early European trading, while Nokia shares were also down by 3.7%.
These developments have raised concerns among investors, reflecting the challenges faced by Ericsson and Nokia in navigating uncertain market conditions.