Ericsson reports fifth straight quarter in the red

STOCKHOLM (Reuters) - Ericsson said on Wednesday it expected the Chinese market to continue to decline as it reported a bigger than expected loss in the fourth quarter, dampening hopes of any quick rebound for the struggling mobile telecom equipment maker.

Ericsson has launched sweeping cost cuts and replaced much of its top management to try to turn around its business, cutting 10,000 jobs from its workforce in the fourth quarter alone.

The company faces mounting competition from China's Huawei and Finland's Nokia as well as weak emerging markets and falling spending by telecoms operators for which purchases of next-generation 5G technology are still years away.

Nonetheless, the company said the latest results were in line with its expectations, with gradual improving performance in its networks segment but lingering losses in its digital business offering network management and cloud-based services.

"The result is however far below our long-term ambition", it said in a statement as it posted its fifth consecutive quarter of operating losses.

It said the Chinese market was expected to continue to decline due to reduced investments in the latest 4G network equipment, while there was positive momentum in North America.

The loss widened to 19.8 billion Swedish crowns ($2.5 bln) from a loss of 280 million a year earlier, and compared to a mean forecast for 17.3 billion crown loss seen in a Reuters poll of analysts.

Fourth-quarter results were hit by previously announced impairments, mainly of goodwill in its digital and media arms, to the tune of 14.2 billion crowns.

Ericsson proposed a dividend of 1.00 crown per share, unchanged from 1.00 crowns in 2016 and in line with expectations for an unchanged payout.

Its quarterly gross margin was 30 percent, roughly unchanged from the third quarter excluding restructuring charges. Ericsson had previously flagged that an increased market share in China would hit gross margins in the fourth quarter.

The Swedish company is targeting a gross margin of 37-39 percent by 2020.

($1 = 7.8646 Swedish crowns)

(Reporting by Helena Soderpalm and Olof Swahnberg; Editing by Eric Auchard and Jane Merriman)