Ericsson (NASDAQ: ERIC) stock surged after reporting stronger-than-expected Q4 earnings. The company’s EPS of 27 cents beat analysts’ consensus of 23 cents. Q4 sales were 69.3 billion Swedish Krona ($7.37 billion), a 5% Y/Y decline but surpassing estimates. Organic sales increased by 6%. The Networks division saw a 6% sales drop.

The Enterprise segment experienced a 25% decline, offset by a 3% growth in Cloud Software. Organic sales in the Networks segment fell by 4%, while Cloud Software and Services sales grew by 12%. Enterprise segment sales grew by 2%. Adjusted gross margin improved to 48.0%, while adjusted EBIT margin rose to 17.7%.

Despite strong financial performance, free cash flow decreased to 14.9 billion Swedish Krona. Ericsson’s net cash position was 61.2 billion Swedish Krona at year-end 2025. CEO Börje Ekholm highlighted organic growth and margin improvements. The company plans to propose a higher dividend and seek authorization for a share buyback.

Looking ahead to 2026, Ericsson expects flat RAN market growth but predicts growth in mission-critical and Enterprise markets. The company plans to increase defense investments while optimizing costs. Q1 sales growth for Networks is expected to align with seasonal averages. Cloud Software and Services sales may be below average seasonality.

Ericsson anticipates a quarterly adjusted gross margin of 49% to 51% for Networks based on current tariff assessments. The company aims to continue R&D investment to enhance its technology leadership. The board plans to propose a higher dividend and seek authorization for a share buyback.

Read more at Yahoo Finance: Ericsson Proposes Bigger Dividends After Strong Quarter