It said Friday (January 20) that operating earnings fell to just over $900 million - down from $1.2 billion a year earlier.
Analysts had expected more than $1 billion.
The Swedish tech firm blamed slower sales of 5G equipment in high-margin markets like the U.S.
Ericsson has found that major U.S. customers such as Verizon have spent less.
Now the company hopes newer markets like India could provide some growth.
Ericsson has also announced plans to cut costs by $880 million by the end of the year.
The firm's Chief Financial Officer said that would involve job cuts.
Ericsson expects a margin fall seen in its networks business to carry on through the first half of this year.
But it believes the effects of cost savings will appear in the second quarter.
Ericsson shares were down around 6% in early trade.
