Ericsson Reports Strong Q4 Results, Raises Dividend Amidst Major Layoffs

Ericsson has reported a higher-than-expected profit for the fourth quarter of 2025, encouraging shareholders with an announced increase in the ordinary dividend despite ongoing workforce reductions. CEO Börje Ekholm described the period as "a good year and a good quarter," attributing growth to successful investments in key areas that are beginning to pay off. The company confirmed layoffs of 1,600 employees in Sweden, exceeding 10% of its workforce, as part of a broader strategy to maintain cost efficiency in a competitive, low-growth telecommunications market.

While the dividend is raised due to a "too strong" balance sheet, Ericsson did not announce an extra dividend, opting instead to maintain stable dividend payments, reflecting a measured approach amidst market uncertainties. CFO Lars Sandström confirmed the company beat financial estimates but emphasized the focus remains on long-term stability rather than extraordinary payouts.

Market analysts and fund managers have responded positively to Ericsson’s report, predicting a rise in the company’s share price. Love Strandberg and Herman Ohlsson highlighted the strong earnings and expected stock appreciation during a financial news broadcast. The Swedish stock market showed slight gains following the report, with comparable analysis noting other firms like Truecaller outperformed expectations with plans to generate substantial cost savings.

Ekholm stressed in an interview from Davos the forthcoming impact of artificial intelligence on network demands by 2026, signalling transformational shifts in connectivity. He also cautioned Europe against knee-jerk reactions to political tensions, particularly regarding US technology reliance, underscoring the strategic importance of the American market to Ericsson’s operations.

However, the company’s generous dividend decision has sparked criticism from union representatives, who question the timing given substantial job cuts, highlighting tensions between shareholder returns and workforce reductions.

In conclusion, Ericsson’s latest financial report demonstrates robust profitability and a confident dividend policy, even as the firm navigates significant restructuring and a complex global technology landscape. The market's upbeat reaction suggests investor confidence in Ericsson's future trajectory, while the company balances growth ambitions against necessary cost controls in a shifting industry environment.