and Ericsson are fierce rivals, but their shares fell in tandem on Friday as telecom providers hit a pessimistic note on demand. North America is a particularly sore spot as telecom companies cut spending.
(ticker: NOK) cut its sales outlook and margin forecast on Friday, citing weaker demand prospects in the second half. Nokia’s US Certificates of Deposit fell more than 9% in premarket trading.
“Customer spending plans are increasingly impacted by high inflation and rising interest rates, as well as some plans that are now slipping through to 2024, particularly in North America,” Nokia said in a statement. communicated.
Finland-based Nokia cut its expected operating margin for this year to 11.5%-13%. It now expects net sales this year to be between 23.2 billion euros and 24.6 billion euros ($26.1 billion to $27.58 billion).
Nokia had previously forecast annual net revenue of 24.6 to 26.2 billion euros and an operating margin of 11.5 to 14%.
Things weren’t much happier for the rival
(ERIC), which said a sharp decline in networking equipment sales in North America was only partially offset by growth in India. Ericsson said earlier this year it would cut 8% of its global workforce in a bid to cut costs.
“We expect the market to experience a gradual recovery in late 2023 and improve in 2024.” Ericsson CEO Borje Ekholm said in the company’s statement.
Although Ericsson met expectations for its second-quarter earnings, it provided a forecast below consensus. The Swedish company said its third-quarter earnings before interest, tax, depreciation and amortization margin should be in line with or slightly higher than the 5.7% in the second quarter. Citi analysts said the consensus was for margin improvement to around 10%.
Ericsson’s U.S. certificates of deposit fell more than 8% in premarket trading on Friday.
For the second quarter, Ericsson posted a net loss of 686 million Swedish crowns ($67.2 million) against a profit of 4.5 billion crowns a year earlier. Sales rose 3% to 64.44 billion crowns compared to the same period a year earlier, but fell 9% on an organic and currency-adjusted basis.
Write to Adam Clark at firstname.lastname@example.org