Ericsson has warned that the financial performance of its core equipment business will likely deteriorate as it battles to regain investors ’ confidence following recent poor performance and corruption investigations.
According to reports, Ericsson’s shares slumped 7% on Friday after the company disclosed weaker-than-expected fourth-quarter results and anticipated that its network’s business profit margins will continue to decline in the first half of 2023.
Citi’s analyst, Andrew Gardiner said the announcement foreshadowed the company’s significant struggles this year.
“We see Ericsson’s outlook as one of the fundamentals deteriorating in the next quarter or two, while the Company strives to recover in the second half and beyond,” he added.
Ericsson’s controversies: Since revealing last year that it may have received payments to the Isis terror organization in Iraq, Ericsson’s stock has dropped.
Last Monday, it took a $220 million provision against a breach in its 2019 deferred prosecution agreement with the US Department of Justice, which was caused by corruption in nations such as China, Indonesia, and Djibouti.
Ericsson also announced last week that it would replace its under-fire chair Ronnie Leten, former CEO of Electrolux, with Jan Carlson, a board member for the past six years and the current chair and former CEO of Autoliv, a Swedish car components maker.
