Ericsson (NASDAQ:ERIC) Issues Earnings Results

Key Points

• Ericsson reported Q1 EPS of $0.13, meeting estimates, but revenue of $5.22 billion missed expectations and was down 10.4% year‑over‑year; management said organic sales grew 6% while FX (strong SEK) reduced EBITA by about SEK 2.2 billion.
• Operational performance and cash generation were strong—adjusted gross margin ~48.1%, Networks margin ~50.4%, EBITA SEK 5.6 billion, net cash rose to SEK 68.1 billion with SEK 5.9 billion free cash flow—and the board approved a SEK 15 billion share buyback starting next week.
• Near‑term headwinds include a SEK 1.4 billion loss in the Enterprise segment and rising memory/semiconductor input costs that could pressure margins; the stock fell about 6.5% on the revenue miss despite the buyback announcement.

Ericsson (NASDAQ:ERIC - Get Free Report) announced its quarterly earnings data on Friday. The communications equipment provider reported $0.13 earnings per share for the quarter, meeting analysts' consensus estimates of $0.13, Zacks reports. The company had revenue of $5.22 billion for the quarter, compared to analyst estimates of $5.74 billion. Ericsson had a return on equity of 23.71% and a net margin of 12.11%.The firm's revenue for the quarter was down 10.4% on a year-over-year basis. During the same quarter last year, the firm posted $1.24 EPS.

Here are the key takeaways from Ericsson's conference call:

• Reported sales fell 10% due to a strong Swedish krona, while organic sales grew 6%; currency moves reduced EBITA by about SEK 2.2 billion, a clear near-term headwind to reported results.
• Operational performance was strong — group adjusted gross margin ~48.1%, Networks margin ~50.4%, EBITA SEK 5.6 billion — and net cash rose to SEK 68.1 billion with free cash flow of SEK 5.9 billionSEK 15 billion buyback starting next week.
• The Enterprise segment reported a SEK 1.4 billion loss (including one‑time costs and the divestment of iconectiv), and management says an improvement plan is in place but losses will gradually shrink through the year.
• Management warned of rising memory/semiconductor and input-cost pressures that are expected to be a headwind (largely into H2), but said they are mitigating via pricing, product substitution, efficiency and diversified supply‑chain actions.
• Geographic and portfolio diversification is working — North America was down mid-single digits while India and Japan grew strongly — and Ericsson is pushing into new addressable markets (enterprise, mission‑critical/defense, 5G sensing) as a medium‑term growth driver.

Ericsson Stock Down 6.5%

Shares of ERIC opened at $11.37 on Friday. Ericsson has a 52-week low of $7.16 and a 52-week high of $12.19. The company has a market capitalization of $38.33 billion, a PE ratio of 14.39, a price-to-earnings-growth ratio of 1.95 and a beta of 0.91. The stock has a fifty day simple moving average of $11.43 and a two-hundred day simple moving average of $10.27. The company has a quick ratio of 1.08, a current ratio of 1.29 and a debt-to-equity ratio of 0.26.

Ericsson Dividend Announcement

The business also recently announced a dividend, which was paid on Thursday, April 2nd. Shareholders of record on Thursday, April 2nd were paid a $0.1663 dividend. The ex-dividend date of this dividend was Thursday, April 2nd. Ericsson's dividend payout ratio (DPR) is 27.85%.

Key Ericsson News

Here are the key news stories impacting Ericsson this week:

• Positive Sentiment: Board approved a SEK 15 billion (~$1.6bn) share buyback to start as early as April 23, aiming to optimize capital structure and return surplus liquidity — a near-term shareholder-support action. Ericsson initiates share buyback program
• Positive Sentiment: Adjusted Q1 EPS modestly beat consensus (reported ≈ $0.13 vs. ~$0.12 expected), which provides some earnings support despite other headwinds. MarketBeat Q1 results
• Neutral Sentiment: Company highlighted 6% organic sales growth led by Networks and announced AI‑native radio products (product/strategy positives), but these were partially masked by FX impacts — longer-term upside depends on execution and cost trends. Ericsson Q1 results PR
• Neutral Sentiment: Analyst/commentary pieces (Zacks, Seeking Alpha) note momentum and long‑term growth potential — useful for investors focused on strategy and valuation after the pullback but not immediate catalysts. Zacks Momentum Coverage
• Negative Sentiment: Revenue missed expectations (reported ~ $5.2–5.4bn vs. higher street estimates) and was down year‑over‑year, which drove the immediate negative reaction—sales weakness in North America was specifically called out. Reuters: revenue miss/NA slowdown
• Negative Sentiment: Management warned of rising input costs—especially semiconductors driven by AI demand—and restructuring charges hit reported profits; these margin pressures are cited as a persistent headwind for near‑term profitability. Benzinga: CPU/chip cost headwinds
• Negative Sentiment: Market reaction has been negative despite the buyback — ADRs slid and trading volume spiked as investors focused on the revenue miss and cost risks rather than the repurchase. QuiverQuant: ADR slide analysis

Institutional Trading of Ericsson

A number of hedge funds and other institutional investors have recently modified their holdings of the stock. BNP Paribas Financial Markets increased its stake in shares of Ericsson by 42.9% in the 2nd quarter. BNP Paribas Financial Markets now owns 3,350,029 shares of the communications equipment provider's stock worth $28,408,000 after acquiring an additional 1,005,398 shares during the last quarter. Russell Investments Group Ltd. increased its stake in shares of Ericsson by 19.1% in the 4th quarter. Russell Investments Group Ltd. now owns 1,903,298 shares of the communications equipment provider's stock worth $18,603,000 after acquiring an additional 304,974 shares during the last quarter. Defiance ETFs LLC acquired a new stake in shares of Ericsson in the 4th quarter worth $13,766,000. Van ECK Associates Corp increased its stake in shares of Ericsson by 229.3% in the 4th quarter. Van ECK Associates Corp now owns 1,252,437 shares of the communications equipment provider's stock worth $12,086,000 after acquiring an additional 872,065 shares during the last quarter. Finally, Lazard Asset Management LLC increased its stake in shares of Ericsson by 197.2% in the 2nd quarter. Lazard Asset Management LLC now owns 1,242,381 shares of the communications equipment provider's stock worth $10,534,000 after acquiring an additional 824,287 shares during the last quarter. 7.99% of the stock is owned by institutional investors and hedge funds.

Analysts Set New Price Targets

A number of research analysts have weighed in on the company. Morgan Stanley assumed coverage on Ericsson in a report on Monday, February 9th. They issued an "equal weight" rating and a $11.00 price objective on the stock. Weiss Ratings restated a "buy (b-)" rating on shares of Ericsson in a report on Monday, December 29th. Citigroup restated a "neutral" rating on shares of Ericsson in a report on Friday, January 16th. Argus upgraded Ericsson to a "hold" rating in a report on Monday, January 26th. Finally, Wall Street Zen lowered Ericsson from a "strong-buy" rating to a "buy" rating in a report on Saturday, April 11th. One equities research analyst has rated the stock with a Buy rating, six have assigned a Hold rating and two have issued a Sell rating to the stock. Based on data from MarketBeat.com, the company currently has an average rating of "Reduce" and a consensus price target of $11.00.

About Ericsson

Ericsson AB is a Swedish multinational telecommunications equipment and services company headquartered in Stockholm. Founded in 1876 by Lars Magnus Ericsson, the company designs, develops and sells infrastructure, software and services that enable mobile and fixed-line networks worldwide. Ericsson serves a global customer base that includes mobile network operators, enterprise customers and public-sector organizations across Europe, the Americas, Asia-Pacific, the Middle East and Africa.

The company's core activities center on building and modernizing network infrastructure, with a particular focus on radio access networks (RAN), core network software, cloud-native solutions and network management systems.

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