Ericsson Slumps 8% as Component Costs Bite Margins — SkimNews
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- Ericsson shares fell 8% in Stockholm on Tuesday, the company's worst earnings-day performance since a 9% slide after October 2023 results, according to FactSet.
- Ericsson reported a 7% decline in adjusted EBITA to 6.88 billion Swedish crowns ($710 million) and a 6% revenue decline to 52.69 billion crowns.
- CEO Börje Ekholm told analysts that Chinese rivals can source memory chips from Chinese suppliers at lower cost, but said Ericsson 'cannot rely on that ecosystem' for export markets, forcing it to rethink product design.
- UBS said the earnings beat analyst estimates while revenue came in 2% below consensus, with the company's outlook implying low single-digit percentage EPS downgrades for 2026 and low- to mid-single-digit reductions for 2027.
- Ericsson plans 'internal measures and pricing actions' to offset the component cost inflation driving the margin pressure.
- The memory-chip price surge has propelled shares of Samsung Electronics, SK Hynix, and Micron Technology higher, while Ericsson sits on the cost-pressured demand side of that trade.
Why it matters: Ericsson is a visible casualty of the AI-driven memory-chip supercycle that has minted gains for Samsung, SK Hynix, and Micron — the same DRAM price spike is compressing Ericsson's margins. The damage extends beyond one quarter: UBS sees low single-digit percentage cuts to 2026 EPS and low-to-mid single-digit cuts to 2027, and CEO Ekholm's admission that cheaper Chinese DRAM is geopolitically off-limits means Ericsson's cost disadvantage versus Chinese rivals is structural, not cyclical.
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