LM Ericsson Shares Hit Three-Year Low

Chief Executive Carl-Henrik Svanberg blamed tightening U.S. and European markets, as well as political instability in Pakistan and other emerging democracies, for slow sales.

Last month the company issued guidance on fourth-quarter sales in the range of 53 billion kronor to 60 billion kronor ($8.38 billion to $9.49 billion).

On Wednesday morning, shares dropped $1.46, or 5.8 percent, to $23.65 in New York. The stock has lost 46 percent since July 12.

Citi Investment Research analyst Sherief Bakr said the guidance news will cause "another blow to investor confidence" in the short term, but that the stock will start to grow again when outlook becomes more apparent. Bakr kept his "Buy" rating and $45 price target.

"Fears over structural margin pressure are overdone, as Ericsson has secured its longer-term position and should be able to harvest future high-margin (and cash-generative) capacity upgrades," he said in a client note.

In October, finance chief Karl-Henrik Sundstrom resigned after Ericsson issued a profit warning.