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Ericsson Predicts Weak Q4

Craig Matsumoto
11/20/2007
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Continuing a real downer of a second half, Ericsson AB (Nasdaq: ERIC) stock got pummeled today after executives predicted a weak fourth quarter.

Ericsson shares were down $3.21 (11.3%) to $25.32 by midday after CEO Carl-Henric Svanberg delivered the news to investors at the company's management briefing in New York.

For its fourth quarter, which ends in December, Ericsson previously had forecast revenues of SEK53 billion to SEK60 billion ($8.44 billion to $9.56 billion). Analysts' fourth-quarter predictions were averaging out to $8.79 billion, according to Thomson First Call .

Ericsson -- and most telecom stocks -- had started the day slightly up. Most of those stocks had turned southwards by the afternoon, and couple of gloomy sentences from Ericsson might have been the catalyst.

"On the network side, we can see that the U.S. and Europe are tightening," Svanberg said, noting that some large operators "are clearly downgrading their investments for 2008."

Today's decline follows a disastrous October for Ericsson, when the company said its third-quarter profits would disappoint, sending the stock down nearly 30 percent. (See Profit Warning Slams Ericsson .)

Ericsson had started the year so well, too, even winning a Leading Lights award for its aggressive merger strategy. (See LR Names 2007 Leading Lights Winners.) But in the wake of the third-quarter shortfall, Ericsson's CFO stepped down, and the inevitable shareholder lawsuits flowed in. (See Ericsson CFO Steps Down and Ericsson Faces Investor Lawsuit .)

— Craig Matsumoto, West Coast Editor, Light Reading

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