ERICSSON AB Chief Executive Officer Carl-Henric Svanberg has reduced the company's earnings projections twice in the fourth quarter. The world's largest maker of wireless networks followed that by reporting its biggest drop in profit since 2003.

The stumbles led to chief financial officer Karl-Henrik Sundstroem stepping down on October 25, and the stock has fallen 36 percent in six months. According to Bloomberg News, Svanberg may need to overcome lower demand for switches, base stations and antennas to regain investor confidence.

"To rebuild trust is tough, to rebuild it in a difficult macro environment is tougher," said Patrick Nielsen, a fund manager at Mapfre Inversion in Madrid, which oversees the equivalent of US$7.1 billion and doesn't hold Ericsson stock. "They should under-promise and over-deliver. They have to show a string of good quarters" to warrant buying the stock again.

Low point

Ericsson is tipped to report today that its first-quarter net income slumped 59 percent to 2.38 billion kronor ($405 million) - the average of nine analysts' estimates compiled by Bloomberg. Sales may have fallen 1.7 percent to 41.45 billion kronor, according to 21 analysts. That would be the first decline since the fourth quarter of 2003.

Svanberg has said the first quarter "could very well be the low point of how things develop." In October, Svanberg said third-quarter profit and sales would miss forecasts, a month after telling analysts that demand was "strong." In November, he cut the sales target again.

Earnings at the company have missed analysts' estimates in three of the past four quarters and met them once. Ericsson spokesman Fredrik Hallstan declined to comment before the report.

"If they are seen to get too bullish too soon it could mean the end for the CEO," said Nicolas von Stackelberg, an analyst at Sal Oppenheim Jr & Cie in Frankfurt, who rates Ericsson shares "neutral."

"Last time the CFO left," he said. "Next time it would be the CEO in the firing line."