Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Ericsson overlook? -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (3642)	8/28/1999 4:30:00 PM
From: elmatador	Read Replies (1) \| Respond to of 5390

ANALYSIS-Clock ticks for Ericsson management 08:01 a.m. Aug 27, 1999 Eastern By Paul de Bendern STOCKHOLM, Aug 27 (Reuters) - Swedish telecoms firm Ericsson has very little time left to prove to investors it is still a force to be reckoned with in such a fast-moving business after poor results and management upheavals. Despite a recovery in the share price from lows hit in July after the ousting of Chief Executive Sven-Christer Nilsson, investors are still very worried about Sweden's biggest company, according to a poll published last week. ``They've got a six-month honeymoon period,' HSBC Securities telecoms analyst Stuart Jeffrey told Reuters. ``Then people will start judging them.' The survey by Affarsvarlden business weekly showed 71 percent of 128 analysts and fund managers said they lacked confidence in the management and 62 percent said they had no faith in Lars Ramqvist as chairman and chief executive officer. ``We understand the uncertainty around the company after all that has happened,' said Ericsson's top spokeswoman Pia Gideon. ``But things are improving now.' Ericsson's share price fell 10 percent between July 7, when Nilsson was fired after only 15 months in the job, and July 22 when the price started to recover, subsequently rising 19 percent while the Stockholm bourse has gained 6.5 percent. Ramqvist, who replaced Nilsson, vowed he would have Ericsson back on course by the end of 1999 by speeding up a cost-cutting programme and mobile phone sales and by improving finances. ``It's believed that Ericsson is taking some concrete steps to address these issues and so far people are giving them the benefit of the doubt,' DLJ analyst Douglas Smith said. The launch of new phones, such as the slim and smart T28 handset, has been welcomed by the market. Although mobile phones account for less than one quarter of Ericsson's sales, which are dominated by systems for mobile and network operators, handsets are crucial for Ericsson's image and branding. Ericsson has lagged rival telecoms groups for too long. It has issued two profit warnings in the last eight months and disappointed investors with lower-than-expected figures for the first half of 1999. This was due to falling demand for public networks and to price pressure and the loss of market share in mobile phones. But it has still managed to keep its position as the world's third-largest mobile phone maker after Nokia and Motorola. Ramqvist, who was chief executive for several years before Nilsson and then became chairman, is now working closely with Ericsson's former Asia head, Kurt Hellstrom, who has been appointed president. Analysts hope that with the management reshuffle Ericsson will break away from being a company run along the traditional top-bottom business lines Swedish industry has seen for decades and become more innovative and nimble. Analysts also complained that Ramqvist -- a heavyweight in Swedish industry -- had interfered with Nilsson's running of the company when he stayed on as chairman, and that the delays in launching new mobiles built up under Ramqvist's tenure as CEO. Another concern is getting operating costs under control and reversing the group's cash outflow, which totalled 18.7 billion crowns in the first half of the year, but some analysts believe that is already being achieved. However they said Ericsson's need to focus on ratinalisation and cost cutting, including shedding 15,000 jobs from its 100,000-strong workforce, may ultimately cost it dearly. ``While Ericsson fixes its cashflow and reorganisation, the risk is that when they're finished with that they'll have lost ground to competitors,' a London-based telecoms analyst said. ``They've got to run fast or lose out to the likes of Cisco, Lucent and Nokia.'