By Dhirendra Tripathi
Investing.com – Ericsson (NASDAQ:ERIC) stock slid 8% in Friday’s premarket trading as the company warned of its market share weakening in China amid the ongoing tensions between the world’s second largest economy and the West.
The company was expecting big orders from Chinese carriers for deploying 5G networks, but with the acrimony showing no signs of abating Ericsson has tempered its hopes. China is the world’s largest market for 5G services.
Sweden, Ericsson’s home country, last year joined other European nations in banning Chinese telecom equipment makers, like Huawei and ZTE (OTC:ZTCOY), from supplying their gear in the country.
Ericsson now stares at a quid-pro-quo, if not formally, at least materially.
Ericsson’s second-quarter sales in China fell by 2.5 billion Swedish crown ($290 million), the first drop in three years, according to Reuters.
China’s share in the company’s second-quarter sales fell to 3% from 9% in the same period last year.
Asked on an analyst call if Ericsson expected to recoup that money, Chief Executive Borje Ekholm replied: "No, it's not coming back," Reuters said.
Chief Financial Officer Carl Mellander told the news agency it was "prudent to forecast materially lower market share" in the future.
Overall, Ericsson’s earnings per share rose 49% on an 8% jump in net sales.