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To: Jon Koplik who wrote (39061)	8/31/1999 12:58:00 PM
From: T L Comiskey	Respond to of 152472

Jon..........Tuesday August 31 12:25 PM ET AT&T Loss Sounds Warning For Ericsson By Salomon Bekele STOCKHOLM (Reuters) - The loss of orders from U.S. long-distance phone operator AT&T to two North American rivals has sounded a warning bell for Swedish telecommunications equipment maker Ericsson. But Ericsson's firm position in the growing mobile infrastructure market bodes well for the future, analysts said. Ericsson shares slid 4 percent Monday on news its most important U.S. customer, AT&T Corp. (NYSE:T - news), had signed contracts with Lucent Technologies Inc (NYSE:LU - news) and Nortel Networks Corp (NYSE:NT - news) for mobile infrastructure equipment. Tuesday, the share lost five more crowns, or 1.85 percent, to 266. ``Is it a warning sign? Yes, it is, but more on the management side than on the technology side. Ericsson has not been flexible enough to keep up with growth in the TDMA market,' said Sean Faughnan, an analyst at JP Morgan. TDMA is a technology for mobile phone networks used in North and South America. ``This will cause a few shudders among investors, but let's keep things in perspective. The mobile market remains very strong and Ericsson is well positioned,' said Faughnan, who calls the share a ``buy' for the 18-24 month perspective. Ericsson had problems delivering equipment to AT&T earlier this year and has said this could have been a reason for the loss of the AT&T contracts. Two weeks before delivering a disappointing set of half-year results in July, Ericsson fired Chief Executive Sven-Christer Nilsson and replaced him with his predecessor, Lars Ramqvist. The AT&T orders mean Ericsson must now share a piece of the AT&T pie with another player. Nortel had not supplied AT&T with equipment in the past. Ericsson, Lucent, and Nortel are each expected to supply one third of AT&T's mobile infrastructure orders, likely to double to 10 billion crowns next year. 'In the short run it probably has no effect,' said Douglas Smith, telecommunications analyst with DLJ. ``But in the longer run it is negative for Ericsson if the company cannot deliver and install products at the speed which customers demand.' Smith has a ``market performer' recommendation on the share. AT&T Wireless accounted for two percent of Ericsson's sales last year, or about 3.6 billion crowns. Ericsson said after the loss of the infrastructure orders its share of telecommunications equipment orders to AT&T would fall to one third from one-half. ``At the same time their purchasing is increasing so we will probably see growth in the volumes we sell to AT&T thanks to that,' said Ericsson spokesman Lars Stalberg. He added the effect on profit would be negligible, but acknowledged it was a blow for Ericsson to be seen as unable to satisfy a major customer like AT&T and forced to reap a smaller share of AT&T's future growth. However, Ericsson and some analysts do not see this as a trend. 'To get too wound up about the spreading of market share by one big customer is not relevant,' said Commerzbank analyst Peter Knox. 'Ericsson has a strong installed base and a strong order flow, which indicates future strong growth in mobile infrastructure.'