- Ericsson's CEO said that job cuts will persist as the vendor continues its cost efficiency drive
- Macro RAN results are flattish, the vendor said
- So Ericsson will be looking to bolster its 2026 sales with enterprise and mission contracts in the defense realm
Ericsson's CEO said it plans to continue job cuts in the future in order to improve cost efficiency as the vendor faces sluggish growth in one of its core businesses.
"We have reduced the headcount, for example, by 5,000 over the past year," said Ericsson CEO Borje Ekholm on the vendor's Q4 earnings call. "And we expect to continue reducing headcount going forward."
Ekholm highlighted Ericsson's recently announced plans to cut 1,600 jobs in Sweden last week and said the reduction was part of a global effort to improve cost efficiency in its business.
RAN tides
"The underlying demand environment for mobile networks remains actually flattish," the CEO stated. "It is encouraging that we had an organic growth of 6% during Q4."
The reason for this, the CEO said, is that Ericsson has invested in "a number of growth opportunities and growth initiatives" like 5G core, mission-critical networks and enterprises. Fierce has already noted Ericsson is taking a two-pronged to the private 5G market, targeting both enterprise campus deployments and larger mission critical private rollouts, unlike its rival Nokia which is likely pivoting towards the larger contracts.
"We're unlikely to see growth in the RAN market this coming year, but our investments in mission critical 5G core and the enterprise will drive growth for the company," the CEO said.
Playing defense
Like Nokia, Ericsson sees mission critical private 5G projects as a key sales driver for the company in 2026. This is because of the continuing war in Ukraine, combined with growing geopolitical tensions around the world.
Ekholm noted Ericsson wasn't involved in the defense sector at all for years. Now, he said, the vendor will probably need to increase its R&D spend "a bit" going forward to reflect its defense projects.
"We actually see the potential for a very sizable market in defense given the spending in the U.S., of course, but it's also the increased European spending on defense [that] will make this into a fairly sizable market," he said.
The numbers
Consolidated revenue of $7.7 billion (SEK 69.3 billion) was down 5% year on year, with Network sales down 6%. However, net income of $910 million (SEK 8.6 billion) jumped substantially from $545.4 million (SEK 4.9 billion) in the same quarter a year ago. Lower selling and administrative expenses and R&D expenses supported the net income growth.
Ericsson shares were trading up on the results 9.34% at $10.47 this afternoon.