A Tale of 2 Financially Troubled Telecom Equipment Makers: Ericsson & Nokia

Ericsson has hired Börje Ekholm as CEO in hopes of rebounding. Image source: Ericsson

What’s going on in the telecom equipment industry when two of the largest suppliers of equipment and services – Ericsson and Nokia (with Alcatel-Lucent in its stable) – report financially troublesome third quarters? Is it due to rivals such as Huawei and Adtran taking market share as service providers upgrade to new technologies? Or is it more likely that the wireline and wireless broadband industries are betwixt major technology rollouts – 4G to 5G for cellular and VDSL2 to G.fast for wireline? Or is it both? In fact, G.fast and 5G may have slowed the telcos’ need for building all-fiber networks – and because 5G is not a completed technology, cellcos are not undertaking massive upgrades.

Sweden-based Ericsson reported a net loss for the first time in four years and blamed weak global demand and the failure of its cutbacks to increase margins. In short, it was saying that it did not cut enough. Nokia reported a sharp decline in Q3 revenues and went from a Q2 profit to a Q3 loss. It predicted that revenues will continue to decline at a rate of single digits in 2017 and that customers’ capital expenditures would be flat for the year…

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