Ericsson shares jumped as much as 11% this week after the Swedish network-equipment maker's third-quarter results, released Wednesday, topped Wall Street's estimates — delivering a strong opening scorecard for new chief executive Per Narvinger, who took over from longtime boss Börje Ekholm on October 1.

Net sales rose 6% to SEK 59.5 billion (about $5.7 billion), with organic growth of 7% driven largely by the Networks division. Adjusted gross margin held at 47.7%. In the U.S., where Ericsson's ADR shares trade on the Nasdaq, the company posted adjusted earnings of 18 cents per share, well above the Zacks consensus estimate of 14 cents, according to a Yahoo Finance market wrap.

A Beat Despite the Profit Plunge

The headline bottom line actually looked rough: net income fell 49% to SEK 5.8 billion from SEK 11.3 billion, and diluted earnings per share dropped to SEK 1.77 from SEK 3.33, according to Ericsson's regulatory filing with the SEC. But that comparison was always going to be lopsided — last year's quarter was inflated by a one-time SEK 7.6 billion gain from selling connectivity unit Iconectiv. Strip that out, and adjusted EBITA still came in at SEK 10.1 billion, enough to beat analysts' pre-report consensus of roughly SEK 7.9 billion compiled by Infront.

"We delivered strong third-quarter results," said CEO Per Narvinger, who added that the radio-access-network market remains flat and that component costs will weigh on gross margins heading into next year.

Investors appear to have looked past the profit decline and focused on the underlying momentum: sales beat forecasts, free cash flow before M&A came in at SEK 4.9 billion, and the company funneled SEK 4.8 billion into share buybacks during the quarter. Ericsson also used the report to announce a simplification of its operating structure, which management said should unlock further cost efficiencies over time — a priority for Narvinger, who previously ran the Networks business and has already overseen job cuts, including roughly 1,600 positions in Sweden earlier this year.

The quarter caps a turbulent year for Ericsson, whose stock cratered more than 12% in July after a disappointing second-quarter report and a leadership shake-up that saw Ekholm step aside after nearly a decade running the company. Wednesday's rebound suggests investors are, for now, giving Narvinger the benefit of the doubt.

Looking ahead, Ericsson guided for fourth-quarter Networks sales growth roughly in line with its three-year seasonal average, with an adjusted gross margin of 49% to 51% for that segment. The company also warned that restructuring charges will stay elevated through the rest of 2026 and that it expects a full-year tax rate of about 28%, with component-cost pressure flagged as a headwind to margins in 2027.