Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) investors are having a rough day after the Swedish telecoms company issued downbeat preliminary earnings. The company said its third-quarter earnings will be “significantly lower” than expected, citing a 19% sales decline in its core mobile-network equipment business to SEK23.3 billion.

Ericsson shares reacted to the news, tumbling nearly 18% to $5.75 in early trading Wednesday.

Jan Frykhammar, President and CEO says: “Our result is significantly lower than we expected, with a particularly weak end of the quarter, and deviates from what we previously have communicated regarding market development. The negative industry trends have further accelerated affecting primarily Segment Networks. Continued progress in our cost reduction programs did not offset the lower sales and gross margin. More in-depth analysis remains to be done but current trends are expected to continue short-term. We will continue to drive the ongoing cost program and implement further reductions in cost of sales to meet the lower sales volumes.” (Original Source)

On the ratings front, LM Ericsson Telephone has been the subject of a number of recent research reports. In a report issued on September 27, BNP analyst Alexandre Faure reiterated a Hold rating on ERIC. Separately, on September 26, Credit Suisse’s Achal Sultania upgraded the stock to Hold and has a price target of $6.40.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Alexandre Faure and Achal Sultania have a total average return of 3.0% and 0.6% respectively. Faure has a success rate of 67% and is ranked #2547 out of 4183 analysts, while Sultania has a success rate of 61.5% and is ranked #2479.

The street is mostly Neutral on ERIC stock. Out of 7 analysts who cover the stock, 7 suggest a Hold rating . The 12-month average price target assigned to the stock is $7.33, which represents a slight upside potential from current levels.

LM Ericsson Telefon AB provides telecommunications equipment and related services to mobile and fixed network operators globally. The company operates through three segments: Networks, Global Services and Support Solutions. The Networks segment delivers products and solutions for mobile access, Internet protocol (IP) and transport networks, and core networks. The Global Services segment delivers managed services, consulting and systems integration, customer support and network rollout services. Its offerings include managed services, such as services for designing, building, operating, and managing networks or solutions; maintenance; network sharing solutions; shared solutions; and managed services of information technology environments, as well as provide broadcast services. The Support Solutions segment offers operations support systems; business support systems that provide revenue management, mediation, and customer care solutions; television (TV) solutions for the creation, management, and delivery of TV experiences on any device over any network; and M-Commerce solutions for money transfer. The Modems segment designs, develops, and sells long-term evolution multimode thin modem solutions for smartphone and tablet manufacturers.