Ericsson (B) Stock: Q4 Earnings Miss Triggers 8% Drop

Ericsson's stock plummeted more than 8% to 89.76 Swedish kronor on Friday following disappointing fourth-quarter results. Despite posting a 30% increase in adjusted operating profit to 9.6 billion kronor and a modest 1% revenue growth to 72.9 billion kronor, the telecommunications giant fell short of analyst expectations. The company's performance was notably mixed across regions, with North America showing remarkable strength, delivering 70% year-over-year growth. However, this regional success wasn't sufficient to offset weaknesses in other markets, particularly in India, where the revenue contribution dropped significantly from 8% to 4% of total sales in the fourth quarter.

Future Outlook and Challenges

Looking ahead to the first quarter of 2025, Ericsson anticipates several headwinds, including seasonal revenue declines in its Networks and Cloud Software & Services segments. While the company has increased its dividend from 2.70 to 2.85 kronor, investor concerns persist due to elevated restructuring costs and ongoing global market challenges. The telecommunications network modernization pace remains sluggish worldwide, though early signs of stabilization in the mobile access technology market provide a glimmer of hope for future recovery.