Ericsson Faces Cost Woes, Launches 15B Kronor Buyback

Ericsson AB's first-quarter financial results fell short of analyst forecasts, impacted by a sluggish market for telecommunications gear and escalating semiconductor expenses, partly fueled by the AI boom.

Adjusted earnings before interest, taxes, and amortization declined 20% from the previous year, reaching 5.6 billion kronor. Revenue also underperformed expectations during this period.

Chief Executive Officer Borje Ekholm acknowledged the rise in input costs, particularly for semiconductors, and outlined the company's strategy to mitigate these issues through product substitution and efficiency enhancements.

Ericsson, alongside other equipment manufacturers, has faced prolonged weak demand from telecom operators as anticipated 5G network upgrade spending has not materialized. The company has previously focused on cost reduction, including eliminating approximately 5,000 jobs globally in 2025 and continuing expense reduction efforts this year.

Adding to its financial strategies, Ericsson announced its intention to commence a 15 billion-kronor share buyback program as early as April 23. This follows a previous buyback announcement in January.

The company's performance and strategies are viewed in the context of a sector seeking to capitalize on AI-driven infrastructure demand. Ericsson shares saw a slight increase of 1.9% on Thursday, closing at 110.25 kronor, with a year-to-date gain of 22%.