Telefonaktiebolaget LM Ericsson (publ) (ERIC): BCG Matrix [Dec-2025 Updated]

You're looking at Telefonaktiebolaget LM Ericsson (publ) right now, and the picture is defintely one of a mature core funding a high-stakes pivot. The steady income from the established Radio Access Network hardware and patent licensing-your reliable Cash Cows-is currently bankrolling the aggressive push into high-growth Stars like Cradlepoint and strategic private 5G deployments. Still, the real strategic tension sits with the heavily funded Question Marks, particularly the overall profitability of Cloud Software and the early-stage 6G research requiring heavy investment, while the legacy 2G/3G gear sits firmly in the Dogs quadrant. Dive below to see exactly where the capital is flowing and where the next big payoff-or write-off-is hiding.

Background of Telefonaktiebolaget LM Ericsson (publ) (ERIC)

You're looking at the latest snapshot of Telefonaktiebolaget LM Ericsson (publ) (ERIC) as of their Q3 2025 report, and honestly, it's a mixed bag of strategic wins and ongoing sales pressure. This company remains a major player in telecommunications equipment and services, with a core focus on 5G technology and Open RAN solutions. They are definitely navigating a tricky environment, but their operational discipline is showing in the margins.

Let's look at the top line first. For the third quarter ending September 30, 2025, reported sales came in at SEK 56,239 million, which was down from the prior year's SEK 61,794 million. Over the last twelve months, total revenue was SEK 240.31 billion, representing a -2.65% year-over-year decline. The company noted a -2% organic sales decline in Q3, though they did see growth in three out of their four market areas.

Where things got interesting was profitability, largely thanks to a one-time event. Net income for Q3 surged to SEK 11,149 million, significantly bolstered by a capital gain from the divestment of iconectiv. The adjusted EBITA (Earnings Before Interest, Taxes, and Amortization) for the quarter hit SEK 15.8 billion, yielding a margin of 28.1%, though the core operational margin, excluding that gain, was a three-year high of 14.7%. Still, the adjusted gross margin improved to a strong 48.1% across the board, reflecting those cost efficiency measures you've been tracking.

Breaking down the business units shows varied performance. The Networks segment, which is the bread and butter, saw sales drop 11% year-over-year to SEK 35.4 billion, with organic sales down 5%. However, their adjusted gross margin in Networks was very solid at 50.1%. Conversely, Cloud Software and Services was a bright spot, with sales growing 3% year-over-year to SEK 15.3 billion, driven by a 9% organic sales increase. The Enterprise segment, however, saw a tough quarter, with organic sales down 6%.

On the balance sheet, the company is sitting pretty with a net cash position strengthened to SEK 51.9 billion as of the end of Q3. Free cash flow before mergers and acquisitions was SEK 6.6 billion for the quarter, showing they are managing cash well despite the sales contraction. Strategically, Telefonaktiebolaget LM Ericsson (publ) (ERIC) reaffirmed its technology leadership with Gartner and Omdia, and they recently landed a massive $14 billion multi-year agreement with AT&T in North America, which analysts expect will push their regional market share well above 50 percent by 2026.

Finance: draft 13-week cash view by Friday.

Telefonaktiebolaget LM Ericsson (publ) (ERIC) - BCG Matrix: Stars

You're analyzing Telefonaktiebolaget LM Ericsson (publ)'s portfolio, and the Star quadrant is where the action is-high market share in markets that are still expanding rapidly. These units require heavy investment to maintain that lead, but they are the future Cash Cows if the market growth matures favorably.

Cradlepoint, now a key part of the Enterprise business, is positioned strongly in the Wireless WAN space. Ericsson is the largest cellular router vendor globally. The overall cellular router and gateway market is forecasted to grow at a compound annual growth rate (CAGR) of 12 percent until 2028, reaching approximately US$ 2.8 billion in annual revenues by the end of that period. While the Enterprise And Other segment revenue for FY2025 is projected at $2.6 Bil, the underlying Wireless WAN market growth rate suggests a high-growth quadrant placement for this specific offering.

The High-performance 5G core network solutions are definitely Stars. Ericsson was recognized as the global leader in Business Performance in the 2025 Omdia Market Landscape report for Core Vendors, scoring 89.8 out of 100, which was a 26 percent increase from the 2024 measurement. This leadership is backed by retaining and strengthening its revenue market share throughout 2025. This core technology underpins the entire 5G ecosystem.

Strategic private 5G network deployments for industrial clients represent another high-growth area. The 5G Private Network Market size is estimated at USD 3.06 billion in 2025, with services in this area forecast to grow at a 45.22% CAGR through 2030. The focus on industrial verticals like manufacturing, which held 33% of the market share in 2024, shows Telefonaktiebolaget LM Ericsson (publ) is targeting a segment with strong immediate ROI drivers.

The Managed Services business focused on AI/automation is where Telefonaktiebolaget LM Ericsson (publ) is investing to drive efficiency within its Cloud Software And Services segment. While the entire segment is projected for FY2025 revenue of $6.1 Bil, the emphasis on AI/automation aligns with the core network strengths noted by Omdia, where capabilities like automation and AI/ML were highlighted as key competitive factors.

Here's a look at the market context supporting these Star positions:

You need to watch the cash burn required to keep these leaders ahead. The investment thesis for Stars is clear:

• Maintain market share leadership in the 5G Core space, evidenced by powering 42 of the world's live 5G SA networks.
• Capitalize on the high growth of Private 5G, which is expected to reach USD 18.68 billion by 2030.
• Leverage the Cradlepoint acquisition to drive growth in Wireless WAN, a market with a 12% CAGR through 2028.
• Ensure the AI/automation focus in Managed Services translates to higher margins than the segment's overall projected 2% growth for FY2025.

For instance, in Q2 2025, the Americas market area drove organic revenue growth, with the U.S. accounting for 44% of second-quarter sales. That's where a lot of the investment is currently flowing to secure that high market share.

Telefonaktiebolaget LM Ericsson (publ) (ERIC) - BCG Matrix: Cash Cows

You're looking at the core engine of Telefonaktiebolaget LM Ericsson (publ) (ERIC) performance, the segment that consistently generates the cash to fund the rest of the portfolio. These Cash Cows thrive on high market share in mature, yet essential, technology areas.

Core Radio Access Network (RAN) hardware, especially in North America, represents a prime example of this quadrant for Telefonaktiebolaget LM Ericsson (publ) (ERIC). The North American market area saw reported Q4 2024 sales increase by an impressive 54% year-over-year. This momentum carried into 2025, with growth in the Americas, particularly North America, driving results in Q1. This dominance is cemented by major deals; for instance, a recent multi-year, $14 billion agreement with AT&T for Open RAN 5G deployment is projected to push Telefonaktiebolaget LM Ericsson (publ) (ERIC)'s regional market share well above 50 percent by 2026. Globally, in the Radio Access Network area, Telefonaktiebolaget LM Ericsson (publ) (ERIC) held a market share of more than 42% in the first quarter of 2025. Excluding China, Telefonaktiebolaget LM Ericsson (publ) (ERIC) leads the pack among RAN vendors.

The stability of this segment is further supported by the consistent income from your extensive patent portfolio. Licensing revenue from the extensive patent portfolio, a steady income stream, acts as a reliable cash buffer. For the first quarter of 2025, Intellectual Property Rights (IPR) licensing contributed SEK 3.2 billion in revenue, a slight increase from the SEK 3.1 billion seen in the first quarter of 2024. Importantly, 82% of that Q1 2025 IPR licensing revenue was tied directly to the Networks segment. While Q3 2025 IPR revenue saw a slight dip to SEK 3.1 billion year-over-year, it remains a significant, high-margin contributor.

The Networks division, which generates the bulk of the company's operating cash flow, is where this cash cow status is most evident. For the full year 2024, the company generated Free Cash Flow before Mergers and Acquisitions (M&A) of SEK 40.0 billion. The Networks segment itself posted a strong adjusted gross margin of 50.1% in Q3 2025, with an EBITA margin of 20.3% in the same period. This division's sales in Q2 2025 totaled SEK 35.7 billion. The overall financial health reflects this segment's strength; for the first six months of 2025, Telefonaktiebolaget LM Ericsson (publ) (ERIC) brought in roughly 8.8 billion SEK in net income, which then jumped to just over 11.3 billion SEK in Q3 alone.

You can see the financial weight of these established businesses in the segment performance data. This is the foundation that funds the riskier Question Marks.

The investments into supporting infrastructure here are focused on maintaining that leadership, not chasing new market growth.

• Maintain product leadership with best energy efficiency in the industry.
• Benefit from strong collections and favorable market mix.
• Continue structural actions to improve supply chain efficiency.
• Invest in infrastructure to improve efficiency and cash flow.

These are the units you want to 'milk' passively, ensuring the operational excellence continues to drive margin expansion. The focus is on commercial discipline and cost actions to keep the cash flowing steadily.

Telefonaktiebolaget LM Ericsson (publ) (ERIC) - BCG Matrix: Dogs

Dogs are business units or products operating in low-growth markets with a low relative market share. For Telefonaktiebolaget LM Ericsson (publ) (ERIC), these areas typically involve sunsetting technologies and regions where market penetration or investment is receding.

Legacy 2G/3G Equipment and Maintenance Services represent a clear Dog category due to the global shift toward newer standards. During the third quarter of 2025, 3G subscriptions declined by 22 million, and 2G subscriptions dropped by 29 million as network sunsetting continues around the world. This trend indicates a shrinking market for maintenance and support of this older infrastructure. The company is actively managing this phase-out, which is characteristic of a product line that no longer warrants significant investment.

Within the Cloud Software and Services portfolio, certain non-strategic or older software products with declining operator demand are candidates for this quadrant. While the overall Cloud Software and Services segment showed a reported sales increase of 3% in the third quarter of 2025 (with organic sales growth of 9%), the second quarter of 2025 showed a more challenging picture, with reported sales declining by 5% year-on-year to SEK 14.4 billion, and organic sales growing by only 1%. The adjusted EBITA margin for this segment in Q2 2025 was 9.6%, though it improved to 10% in the same quarter according to another report, suggesting margin volatility or a mix of products within the segment.

The Enterprise division also contains elements that fit the Dog profile, particularly the Global Communications Platform. In the second quarter of 2025, sales for the Global Communications Platform declined by 9%, reflecting a strategic decision to reduce activities in some countries and prioritize profitable market segments over low-margin deals. Overall Enterprise sales in Q2 2025 decreased by 14%, with organic sales down 6%.

Several regional markets exhibited low or negative growth in the second quarter of 2025, suggesting low market share or growth dynamics that are not favorable for Telefonaktiebolaget LM Ericsson (publ) (ERIC) at present. The South East Asia, Oceania and India market saw sales decline by 28% year-over-year, primarily due to reduced network investment levels in India. North East Asia sales were down by 17% year-over-year. The Europe, Middle East & Africa (EMEA) region's overall sales decreased by 6% year-over-year.

Here is a snapshot of the financial and statistical data for the segments and regions identified as potential Dogs based on recent performance trends:

The strategy for Dogs involves minimizing exposure. Expensive turn-around plans usually do not help, so divestiture or aggressive cost reduction to maintain break-even status is the typical path. The focus should be on freeing up capital tied up in these low-return areas.

• Legacy 2G/3G maintenance contracts nearing end-of-life.
• Global Communications Platform activities that do not meet profitability targets.
• Regional operations in markets showing sustained double-digit sales declines, such as South East Asia/Oceania/India.
• Software products that require disproportionate support relative to revenue generated.

Telefonaktiebolaget LM Ericsson (publ) (ERIC) - BCG Matrix: Question Marks

You're looking at the areas within Telefonaktiebolaget LM Ericsson (publ) that are in high-growth markets but haven't yet secured a dominant, self-funding market share; these units consume cash to fuel their expansion potential. For Telefonaktiebolaget LM Ericsson (publ), these Question Marks are characterized by significant investment needs to fend off competitors or achieve scale.

New Enterprise Ventures and Divestitures

The former focus on the Internet of Things (IoT) Accelerator business, which was part of the Enterprise segment, has been strategically exited. This move itself suggests a prior classification as a Question Mark that was deemed too cash-intensive without sufficient returns. Prior to the sale to Aeris, this unit was the main driver of losses in its division, with expected quarterly losses amounting to SEK 0.25 billion ($24 million) and a one-time hit to EBIT of SEK 1.1 billion ($96.2 million) associated with the divestiture in late 2022/early 2023. This action cleared the path for focusing resources on areas like enterprise 5G and 5G private networks, which are now key growth vectors.

Cloud Software and Services Profitability Trajectory

The Cloud Software and Services division, which houses core network software, still exhibits the characteristics of a Question Mark, demanding investment to solidify its market position despite showing significant recent improvement. For the third quarter of 2025, this group reported sales of SEK 15.3 billion, swinging to an operating profit of SEK 1.7 billion, a notable turnaround from an operating loss of SEK 400 million a year prior. However, this performance follows a more challenging first half. In the first quarter of 2025, the segment's sales were SEK 13 billion, with an organic sales decline of 3%, though it managed an adjusted EBITA profit of SEK 0.2 billion (a 1.2% margin). By the second quarter of 2025, sales were SEK 14.4 billion (organic growth of 1%), with an adjusted EBITA margin of 9.6%. The volatility and the need to scale profitably keep this segment in the Question Mark quadrant, as it requires cash to compete effectively against pure-play software vendors.

Heavy Investment in 6G Research and Development

Early-stage ventures, particularly in the realm of 6G research and development, are classic Question Marks because they require substantial, long-term cash consumption before any revenue generation. Telefonaktiebolaget LM Ericsson (publ) reaffirmed its commitment to this future technology, continuing its multi-million pound investment in the U.K. research program, which initially involved a commitment of tens of millions of pounds over 10 years. Globally, the company's overall R&D investment was substantial, totaling over 21 per cent of revenue in 2024, with annual global R&D spend being around USD 5 billion. These funds are directed toward critical 6G pillars like cognitive networks and energy efficiency, essential for future market leadership but currently non-revenue generating.

Scaling Digital Services Against Competition

While the Digital Services area, embodied by the 5G Core offering, shows market leadership in performance, the intense competition necessitates heavy investment to maintain and grow share-a key Question Mark dynamic. In the 2025 Omdia Market Landscape report for Core Vendors, Telefonaktiebolaget LM Ericsson (publ) ranked first in Business Performance with a score of 89.8 out of 100, a 26 percent increase from 2024. The company powers 42 of the world's 70+ live 5G SA networks and holds 140+ unique 5G Core or cloud-native commercial contracts. This high market share in a high-growth area suggests a Star, but the continuous, high-cash investment required to fend off rivals and secure vendor replacement deals keeps the pressure on, forcing a strategic choice: invest heavily to solidify dominance or risk losing ground.

Here's a quick look at some of the relevant financial metrics for these areas, noting that segment reporting can overlap:

The strategic imperative for you here is clear: you need to monitor the organic growth rate of Cloud Software and Services closely. If the positive EBITA trend seen in Q3 2025 does not continue, this unit risks falling into the Dog quadrant despite its market potential.

• IoT Accelerator: Divested due to quarterly losses of SEK 0.25 billion.
• Cloud Software & Services: Transitioning from loss to profit, with Q3 2025 operating profit at SEK 1.7 billion.
• 6G R&D: Supported by global R&D spend of roughly USD 5 billion annually.
• 5G Core: Market leader in Business Performance (89.8/100 score), but requires sustained high investment to defend share.

Finance: draft 13-week cash view by Friday.