Ericsson (ERIC) Stock: Telecoms Maker Smashes Earnings, Buyback Announced

TLDR

• Ericsson’s Q4 2025 adjusted operating profit hit 12.26 billion crowns, surpassing the 10.09 billion crown analyst forecast
• First-ever $1.7 billion share repurchase program announced, running from Q1 2026 through 2027
• Q4 net sales reached 69.3 billion crowns versus 66.6 billion crown estimates
• Dividend raised to 3 crowns per share from 2.85 crowns
• Company cutting 1,600 Swedish jobs to improve efficiency

Ericsson delivered a fourth quarter performance that crushed analyst expectations. The Swedish telecoms equipment maker posted adjusted operating profit of 12.26 billion crowns for Q4 2025.

Wall Street had predicted just 10.09 billion crowns. The 21% earnings beat marks a turning point for the company’s restructuring efforts.

The real headline came with Ericsson’s announcement of a 15 billion crown share buyback. That translates to approximately $1.7 billion heading back to investors.

Telefonaktiebolaget LM Ericsson (publ), ERIC

This marks the company’s first-ever repurchase program. The buyback starts after Q1 2026 earnings release and runs through 2027.

Shareholders got another win with the dividend announcement. The annual payout jumps to 3 crowns per share from 2.85 crowns.

Revenue Beats Fuel Optimism

Fourth quarter sales numbers also exceeded expectations. Net sales totaled 69.3 billion crowns against the 66.6 billion crown consensus.

Europe, the Middle East, and Africa drove the revenue growth. North American operations remained stable throughout the quarter.

Ericsson operates as one of two major Western network equipment suppliers alongside Nokia. Both companies have faced headwinds from declining 5G investment levels.

The improved results stem from aggressive cost management. Ericsson also sold its U.S.-based Iconectiv business, strengthening its cash position.

That cash influx made the buyback program financially feasible. Management clearly feels confident about the company’s trajectory moving forward.

Restructuring Push Continues

Job cuts remain part of Ericsson’s efficiency drive. The company announced 1,600 position eliminations in Sweden earlier this month.

These workforce reductions aim to streamline operations and boost margins. Ericsson also quickly adapted to U.S. import tariffs implemented last year.

CFO Lars Sandström discussed potential opportunities in Europe during a Reuters interview. The European Commission proposed phasing out high-risk suppliers from critical infrastructure.

Such regulatory changes could benefit Ericsson and Nokia. However, Sandström cautioned against expecting immediate results.

“If that comes into place, then of course we are ready to take that opportunity,” he stated. He emphasized these policy shifts typically take considerable time to implement.

The strong quarterly performance validates Ericsson’s strategic direction. Both revenue and profit exceeded forecasts while maintaining North American stability.

The buyback program sends a clear message to the market. Management believes the company has weathered the worst of the 5G slowdown.

Ericsson’s cash generation improved through both operational changes and asset sales. The Iconectiv divestiture provided funds while cost cuts enhanced profitability.

Fourth quarter results demonstrate the restructuring plan is working. The company delivered on both top-line growth and bottom-line profitability while managing challenging market conditions.

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Source: https://blockonomi.com/ericsson-eric-stock-telecoms-maker-smashes-earnings-buyback-announced/