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Why LM Ericsson's Stock Fell 12% Today

What happened

Shares of LM Ericsson (NASDAQ: ERIC) plunged on Wednesday following the Swedish telecom infrastructure specialist's second-quarter earnings report. As of 11:40 a.m. EDT, the stock traded 11.7% lower.

So what

Ericsson's second-quarter sales rose 10% year over year in local currencies, landing at $5.9 billion. Adjusted earnings stopped at $0.63 per diluted share, up from a loss of $0.10 per share in the year-ago period. The results were largely in line with analyst expectations but it wasn't enough to support a skyrocketing Ericsson stock. As of Tuesday night, Ericsson's shares had surged 25% higher in 52 weeks. Some investors are cashing in a bit of their profits today.

One corner of LM Ericsson's logo-adorned Stockholm headquarters, shot at night.
One corner of LM Ericsson's logo-adorned Stockholm headquarters, shot at night.

Image source: LM Ericsson.

Now what

In a post-earnings interview with Swedish newspaper Dagens Nyheter, Ericsson CEO Borje Ekholm suggested that the tides are turning for his beleaguered company.

"We continue to grow and we are increasing our profits, but we have more work to do," he told the newspaper. "It isn't time to start cooling the champagne yet. We must continue to grow and control our costs -- next year will be important for us."

In particular, Ekholm looks forward to worldwide implementation of the new 5G wireless standards.

"At first, we had to be the first to show off the new technology but now it's all about being the best," he said. "And we are in a good position, we are part of two-thirds of the commercial networks that have been announced."

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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