Shares plunged 8.1% to $10.77 in pre-market trading on July 14 as Ericsson released second-quarter results that confirmed what investors feared: the telecom equipment giant is still struggling to grow. Reported sales came in at SEK 52.7 billion, down from SEK 56.1 billion a year ago, with organic sales declining 1% year-over-year — primarily due to lower patent licensing revenues that had been inflated by a one-time settlement in the prior-year period. The drop lands just weeks before a CEO transition that adds strategic uncertainty to an already fragile picture.
Revenue Fell 6%, and That's Not Just a Currency Problem. Ericsson generated SEK 52.7 billion in Q2 2026, versus SEK 56.1 billion a year earlier — a 6% reported decline. Weaker patent licensing income was the main drag; excluding it, the core mobile networks business was broadly flat.
Organic sales grew in three of four geographic regions , but that wasn't enough. Analysts had expected $5.59 billion in revenue and $0.11 in earnings per share — and the Q1 miss was still fresh: last quarter, Ericsson missed revenue estimates by nearly 4% and earnings by a staggering 73%.
Margins Held, but Cost Headwinds Are Building. The adjusted gross margin ticked up to 48.4%, from 48.0% a year ago , a bright spot showing pricing discipline. But management issued a clear warning: component cost inflation is rising, and the company expects pressure on network margins in Q3 as large rollout projects increase. For a business where profit-per-unit matters more than volume, that caution matters.
A CEO Change Adds Uncertainty at a Critical Moment. Per Narvinger, Ericsson's networks chief, will replace outgoing CEO Börje Ekholm on October 1, 2026 , after Ekholm's nine-year tenure. Analysts note the traditional equipment market has low growth, with wireless carriers still cautious about spending.
One industry observer warned "continuity isn't reinvention" and said Ericsson must show where durable growth will come from.
The Stock Looks Stretched — Even After Today's Drop. ERIC's 52-week range runs from $7.16 to $13.77 , and even at $10.77, the average analyst price target sits at just $9.93 . Ericsson returned SEK 8.2 billion to shareholders via buybacks in Q2 , partly supporting the stock — but buybacks can't substitute for top-line growth. Today's sell-off reflects a market that wants proof the AI-connectivity narrative can translate into real revenue, not just press releases.