Ericsson (NASDAQ:ERIC) shares fell Friday after the telecommunications equipment maker reported weaker-than-expected first-quarter earnings and a decline in revenue.
The company posted earnings per share of 3 cents, missing analysts’ consensus estimate of 13 cents. Quarterly sales came in at 49.3 billion Swedish kronor ($5.4 billion), down 10% from a year earlier and below expectations of $5.7 billion.
Organic sales, which exclude the effects of acquisitions, divestments, and currency movements, rose 6% in the period.
Sales in the Networks division, Ericsson’s core business, declined 8%. The Enterprise segment dropped 30%, largely due to the divestment of iconectiv in 2025. Cloud Software and Services revenue fell 9%.
On an organic basis, Networks sales rose 7%, supported by growth in three of four market areas. Cloud Software and Services organic sales increased 4%, while Enterprise organic sales also rose 4%, driven by the Global Communications Platform.
Profitability weakened during the quarter. Adjusted gross margin edged down to 48.1% from 48.5% a year earlier. Adjusted EBIT margin fell to 10.6% from 11.3%, while adjusted EBITA margin declined to 11.3% from 12.6%.
Free cash flow before mergers and acquisitions rose to …