Ericsson AB posted a weaker first‑quarter 2026 than expected, with adjusted earnings before interest, tax and amortisation (EBITA) slipping 20% to SEK 5.6 billion. The 11.3% margin fell short of the 12.6% analysts had penciled in, marking the first time the Swedish telecoms equipment maker missed its profit forecast since the quarter ended March.

On a reported basis, which includes restructuring costs, EBITA plunged 73% to SEK 1.8 billion. The Networks segment, which accounts for roughly two‑thirds of group sales, saw revenue dip 8% to SEK 32.9 billion. The downturn was most pronounced in the Americas, where a surge of investment that had lifted the region 26% year‑on‑year in Q1 2025 reversed sharply as U.S. operators scaled back spending.

CEO Börje Ekholm blamed rising semiconductor input costs, noting that “we are facing increasing input costs, especially in semiconductors, caused in part by AI demand.” The surge in AI‑driven hardware needs has pushed component prices higher, squeezing margins in the hardware‑intensive Networks business.

Ericsson’s restructuring programme also added pressure. The company announced plans to cut about 1,200 jobs in Sweden during 2025, a move aimed at trimming its cost base. Those headcount reductions translated into higher restructuring charges that weighed on the reported figures.

Outside the United States, the picture was more encouraging. Sales grew across Europe, the Middle East and Africa, as well as in Southeast Asia, Oceania, India and Northeast Asia. The broader regional balance helped offset the Americas decline.

The Cloud Software and Services segment, which Ekholm is positioning as a higher‑margin growth engine, delivered better margins thanks to delivery‑efficiency gains. Improved performance in this software‑led area partially countered the margin squeeze in Networks, where adjusted gross margin slipped to 48.1% from 48.5% a year earlier.

Looking ahead, Ericsson expects the global radio‑access‑network equipment market to remain broadly stable in 2026, citing Dell’Oro Group data. The firm sees opportunities in mission‑critical communications and enterprise segments, areas where it has been investing selectively.

For the full year 2025, the company posted an adjusted EBITA margin of 18.1% and net income of SEK 28.7 billion, reflecting a multi‑year recovery from a near‑zero profit year in 2024. While the Q1 dip halts that momentum temporarily, Ekholm stressed the company’s resilience, saying, “We are not immune, but we are resilient.”

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