* Operating profit inc JVs 4.2 bln SEK vs forecast 4.5 bln
* Says sales are under pressure
* Shares drop 7 pct, biggest fall in 21 months (Adds comment, background, detail, shares)
By Sven Nordenstam and Simon Johnson
STOCKHOLM, Oct 24 (Reuters) - Ericsson's turnaround drive was thrown into doubt on Thursday as theworld's biggest mobile networks maker missed third-quarterprofit forecasts and said sales were coming under pressure inthe United States and Japan.
Shares in the Swedish group dropped 7 percent, the biggestfall by a European blue-chip stock, and dragged downrivals Nokia and Alcatel-Lucent.
A decade-long price war in Ericsson's industry, launched byChinese vendors Huawei and ZTE, has alreadyforced suppliers like Nortel and Motorola out of the market.
In a do-or-die effort, struggling Alcatel-Lucent this monthannounced it was slashing 10,000 jobs - one seventh of itsworkforce - its sixth restructuring plan since 2006.
Ericsson has had some success recently in winning businessfrom the swathe of telecoms firms looking to invest in fasterfourth-generation networks. Vodafone, for example, hassaid it will boost spending by 6 billion pounds ($9.7 billion)over three years, and analysts expect others to follow.
But the Swedish group said on Thursday that while businessin Europe was picking up and profitability there improving,activity was slower in the United States and Japan, where bigprojects were coming to completion.
"We are currently seeing sales coming under some pressure,"Ericsson chief executive Hans Vestberg said.
Analysts also pointed to a lower gross margin than expected,which fell compared to the second quarter.
"This trend in particular should cause pressure to consensusprofit expectations today, more so than the miss at the topline," Barclays said in a research note.
Earnings before interest and tax were 4.2 billion Swedishcrowns ($658 million) in the third quarter, up from 3.1 billiona year earlier, including joint ventures, but missing a forecastof 4.5 billion in a Reuters poll of analysts.
Sales were 53.0 billion crowns, well short of the forecast55.1 billion, and down on last year's 54.6 billion.
Sales at Ericsson's key Networks unit, which accounts forjust over half of revenue, rose 4 percent year-on-year, adjustedfor currency swings. That was the lowest growth in a year andwell below the 7-9 percent in the three previous quarters.
MORE COMPETITION?
"The report raises a lot of questions about the future,"said Bengt Nordstrom, head of telecoms consultancy Northstream.
He also pointed to signs the competitive environment forEricsson could get tougher.
Finland's Nokia has this year turned into more streamlinedrival by fully taking over its previous network joint venturewith Germany's Siemens - Nokia Siemens Networks (NSN)- and selling its handset business to Microsoft.
That move echoed Ericsson's own disposal of its handsetjoint venture to partner Sony in 2011 and has given Nokia aclearer focus and better finances to support an aggressivecampaign to grab market share new generation networks.
"When it comes to the general market, it should be notedthat one of Ericsson's competitors, NSN, with new owners andcapital, are very active in many markets resulting in continuedtough pricing pressure going forward," Nordstrom said.
The need for scale has led to speculation that Nokia and Alcatel-Lucent will merge and sources have told Reuters theFinnish company has looked at the possibility.
Ericsson shares were down 7.1 percent at 78.30 crowns at1130 GMT, on track for their biggest single-day fall in 21months. Nokia shares were down 3.2 percent whileAlcatel-Lucent's fell 3.0 percent. Both firms report earningsnext week.
"We see a rather negative readacross for Alcatel-Lucent, asEricsson's sales were down materially in North America, a regionto which Alcatel-Lucent is overexposed," Bernstein analysts saidin a research note.
($1 = 6.3794 Swedish crowns) (Additional reporting by Olof Swahnberg; Editing by JaneMerriman and Mark Potter)