LM Ericsson Telephone's stock surged 8.87% during pre-market trading on Friday, following the release of its fourth-quarter 2025 financial results.

The Swedish telecommunications equipment maker reported quarterly earnings and sales that significantly exceeded analyst expectations. The company's strong performance was driven by solid operational execution and margin improvements across its business segments.

Investors responded positively to Ericsson's announcement of increased shareholder returns, including a dividend hike to SEK 3.00 per share from SEK 2.85 and a proposed $1.7 billion share buyback program. The company cited strong free cash flow generation and a robust cash position, bolstered by cost-cutting measures and the recent sale of its Iconectiv business, as enabling these capital return initiatives.