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STOCKHOLM, Jan 26 (Reuters) - Mobile telecom equipment maker Ericsson ERICb.ST slashed its 2016 dividend by 73 percent on Thursday as it posted fourth-quarter operating income below market expectations and said its network market remained weak.
The dividend cut is Ericsson's first since 2008 - a year of financial crisis - and comes after a year which has seen the firm's shares fall 35 percent. The 1.00 Swedish crown ($0.1134) dividend was below expectations of 1.73 crown in a Reuters poll.
Ericsson said sales in North America, its biggest market, had fallen 13 percent year-on-year, while sales dropped 21 percent in Western and Central Europe. Overall sales at Ericsson were down 11 percent year-on-year.
"In the near term, stability will be key to establishing a strong base for future growth. This means prioritizing profitability over growth," CEO Borje Ekholm said in a statement.
Last year was brutal for Ericsson with former CEO Hans Vestberg ousted, a profit warning which shocked investors and the announcement of sweeping staff cuts.
Veteran board member Ekholm took over as CEO this month and most analysts say he faces an uphill task to steer Ericsson through its worst crisis in a decade, grappling with shrinking markets and fierce competition from China's Huawei HWT.UL and Finland's Nokia NOKIA.HE .
The company is wrestling with a drop in spending by telecoms firms, with demand for next-generation, 5G technology still years away, and weak emerging markets.
Operating income was a loss of 300 million Swedish crowns compared to a 11.0 billion profit in the year-ago quarter and below a mean forecast of a 417 million crowns profit in a Reuters poll of analysts. ID:nL5N1FA1M4
Sales were 65.2 billion crowns, above a forecast of 59.2 billion. The gross margin was 26.1 percent, under the mean forecast of 28.1 percent. Link to the report: ($1 = 8.8222 Swedish crowns)