(April 17): Ericsson AB earnings missed analysts’ forecasts in the first quarter, as the Swedish company struggled in a weak market for telecommunications equipment and rising chip costs, in part due to the artificial intelligence boom.
Adjusted earnings before interest, taxes and amortisation were 5.6 billion kronor (US$610 million), down 20% from a year earlier, the Stockholm-based company said in a statement on Friday. That compared to an average analyst estimate of 5.84 billion kronor, according to data compiled by Bloomberg.
Ericsson shares fell about 6.7% on Tradegate compared to Thursday’s close in Stockholm. The stock has gained 22% this year.
“We are facing increasing input costs, especially in semiconductors,” chief executive officer Borje Ekholm said in the statement. “Our ambition is to offset these challenges, by working closely with customers and suppliers, and through product substitution and efficiency actions.”
Increasing demand for AI services could continue to raise costs throughout the year, chief financial officer Lars Sandström said in an interview, adding that the ongoing war in the Middle East poses challenges for production.
Ericsson and other telecommunications equipment makers have wrestled for years with weak demand from phone companies as anticipated spending on 5G network upgrades failed to materialise. In response, the company has focused on slashing costs, eliminating about 5,000 jobs worldwide in 2025 and plans to continue to reduce expenses at a similar pace this year.
Ericsson sees opportunities in the radio access networking markets of India and China, while Europe remains flattish as network operators struggle to make returns on their investment, Sandström said. The company recorded lower sales in North America in the first quarter, he added.
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Total revenue was down 10% from a year earlier to 49.33 billion kronor in the first quarter, missing expectations. Adjusted Ebita margin fell to 11.3%.
The Stockholm-based company announced its first-ever buyback in January and said on Thursday that it would start the 15 billion-kronor programme as soon as April 23.
While Finnish rival Nokia Oyj is attempting to position itself as a go-to European supplier as the continent seeks to move away from US technology companies and Chinese network kit makers, Ekholm has called the push for European tech sovereignty dangerous. The US is Ericsson’s biggest market and one of its most important projects is a US$14 billion contract to modernise AT&T Inc’s wireless network that it won in 2023.
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The telecommunications sector is also trying to find ways to capitalise on the booming demand for AI applications, and the commensurate spend on the infrastructure required to power the technology. Nokia has reorganised its business to prioritise AI networking after a US$1 billion equity investment by chip giant Nvidia Corp announced last year.
Uploaded by Evelyn Chan
