Ericsson Shares Plunge 11% on Tariff Concerns and Earnings Miss

Key Points:

* Ericsson's U.S.-traded shares sank 11% on Friday.
* The telecom equipment company warned of potential impact from Trump administration tariffs.
* Ericsson missed earnings estimates due to increased expenses.
* Sales surged in North America but declined in most other regions.

Ericsson's American depositary receipts (ADRs) plunged 11% on Friday after the Swedish company reported disappointing profits and expressed concerns about the potential consequences of tariffs from the Trump administration.

In its fourth-quarter earnings report, Ericsson highlighted that the "incoming U.S. administration has indicated its intention to impose tariffs on imports to the U.S., which could significantly harm the information and telecommunications industry." The company also cited uncertainties regarding bilateral trade between China and various nations, including Sweden.

Ericsson's earnings per share (EPS) for the fourth quarter stood at 1.44 Swedish kronor ($0.13), falling short of the SEK2.07 ($0.19) forecast by analysts. Revenue grew 1% year-over-year to SEK72.91 billion ($6.68 billion), largely meeting expectations.

Sales in North America skyrocketed by 53% to SEK22.0 billion, driven by contract wins, increased network investments, software demand, and project completion timing. Sales remained stable in Europe and Latin America, while they declined in Southeast Asia, Oceania, and India (-28%), Northeast Asia (-22%), and the Middle East and Africa (-19%).

Despite rising expenses in R&D and Selling & Administrative, Ericsson ADRs have gained approximately 40% over the past year.