Telefonaktiebolaget LM Ericsson Sponsored ADR Class B(ERIC.US) fourth-quarter profit nearly doubled far exceeding expectations, announcing its first-ever 15 billion kronor share buyback in history.

Swedish telecommunications equipment industry giant Telefonaktiebolaget LM Ericsson Sponsored ADR Class B (ERIC.US) announced a strong performance fourth quarter financial report for the 2025 fiscal year on January 23, 2026. The report indicated that with the gradual recovery of global network demand, combined with a series of strict cost control measures taken by the company, Telefonaktiebolaget LM Ericsson Sponsored ADR Class B's profitability in the quarter far exceeded market expectations. Boosted by this impressive financial report, Telefonaktiebolaget LM Ericsson Sponsored ADR Class B's board of directors officially announced the launch of a stock buyback plan of up to 15 billion Swedish Krona (approximately $1.7 billion). It is worth mentioning that this is the first time Telefonaktiebolaget LM Ericsson Sponsored ADR Class B has proposed such a large-scale stock buyback since its establishment. The financial report showed that Telefonaktiebolaget LM Ericsson Sponsored ADR Class B's adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITA) for the fourth quarter reached 12.7 billion Swedish Krona, an increase of 24% compared to the same period last year, significantly higher than analysts' previous estimate of 10.5 billion Swedish Krona. Furthermore, its adjusted EBITA profit margin improved to 18.3%. In this quarter, net profit performance was particularly outstanding, soaring from 4.9 billion Swedish Krona in the same period of 2024 to 8.6 billion Swedish Krona, almost doubling; diluted earnings per share also saw a significant increase, rising from 1.44 Swedish Krona to 2.57 Swedish Krona. Despite a slight decrease in sales revenue to 69.3 billion Swedish Krona year-on-year due to currency fluctuations, which exceeded market expectations, organic sales revenue actually achieved a 6% year-on-year increase. Additionally, thanks to efficiency improvements in the cloud software and services sector, the company's adjusted gross profit margin improved to 48.0%. In terms of business segments, Telefonaktiebolaget LM Ericsson Sponsored ADR Class B's mobile network business performed steadily, with organic sales revenue increasing by 4%, driven by growth in the European, Middle Eastern, and Southeast Asian markets, despite fluctuations in the Americas and Northeast Asian markets. The cloud software and services sector showed even more aggressive performance, with an organic sales revenue growth rate of 12% and a significant increase in gross profit margin. Telefonaktiebolaget LM Ericsson Sponsored ADR Class B stated that it would propose a dividend of 3 Swedish Krona per share for 2025 and launch a 15 billion Swedish Krona stock buyback plan. Analysts had previously estimated a dividend of 3.76 Swedish Krona per share. The company's cash position has strengthened further after selling the Iconectiv business, driving profit growth in the third quarter. The core of this stock buyback plan is supported by its robust cash flow. By the end of 2025, Telefonaktiebolaget LM Ericsson Sponsored ADR Class B's net cash reserves had increased significantly from 37.8 billion Swedish Krona in the same period last year to 61.2 billion Swedish Krona, with a fourth-quarter free cash flow of 14.9 billion Swedish Krona excluding mergers and acquisitions. Adequate "ammunition" reserves provide a solid foundation for shareholder returns. For years, Telefonaktiebolaget LM Ericsson Sponsored ADR Class B and other telecommunications equipment manufacturers have been struggling due to weak operator demand, as expected 5G network upgrade spending has not materialized. In response, the company has focused on cost reduction measures, announcing in early January this year a reduction of around 13% of positions in Sweden. Last year, the company cut about 5,000 jobs globally. The company's CEO Borje Ekholm stated that cost reduction will continue at the same pace in 2026. This combination of "profit exceeding expectations + historic first buyback" is aimed at demonstrating to the outside world that its cash flow has been robustly restored. In addition to strong financial performance, Telefonaktiebolaget LM Ericsson Sponsored ADR Class B has also shown a positive trend in business development. The company continues to invest in the research and deployment of 5G technology, establishing partnerships with major operators worldwide to promote network modernization and capacity enhancement. Furthermore, Ekholm stated that future growth will come from the prosperity of artificial intelligence. New applications of this technology, such as drones and AI glasses from Meta Platforms (META.US), will demand higher network capabilities. "Connectivity is crucial," Ekholm said. "I believe that artificial intelligence and connectivity are actually the cornerstones of the future. Therefore, our strategic focus is to build the best AI-powered network." The company expects the wireless access network (RAN) market to remain stable this year, with growth expected in the enterprise and "mission-critical" markets. The company's CFO Lars Sandstrm stated in another interview, "We live in a world where the wireless access network (RAN) market is becoming saturated. We must offset inflation and cost increases by improving business efficiency." Considering this trend, Telefonaktiebolaget LM Ericsson Sponsored ADR Class B plans to increase investment in the defense sector. It is worth noting that its Finnish competitor Nokia Oyj Sponsored ADR (NOK.US) also sees defense as a growth market. After chip industry giant NVIDIA Corporation (NVDA.US) announced a $1 billion investment in Nokia Oyj Sponsored ADR last year, Nokia Oyj Sponsored ADR subsequently restructured its business and positioned AI networks in a key development position. Today, Nokia Oyj Sponsored ADR is trying to position itself as the preferred supplier in Europe as the continent strives to reduce reliance on U.S. tech companies and Chinese network equipment manufacturers. However, Telefonaktiebolaget LM Ericsson Sponsored ADR Class B is adopting a different strategy. This week at the World Economic Forum in Davos, Ekholm stated that Europe's so-called "technology sovereignty" initiative is "dangerous."