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

To: elmatador who wrote (5146)	3/17/2003 12:38:16 PM
From: Jim Oravetz	Read Replies (4) \| Respond to of 5390

Ericsson Soars Share on News Of Shake-Up, Legal Settlement By BUSTER KANTROW DOW JONES NEWSWIRES STOCKHOLM -- Shares of Telefon AB L.M. Ericsson soared Monday after the struggling Swedish telecommunications-equipment maker announced a further shuffle of its leadership team and said it had settled a long-running patent dispute. Ericsson said Karl-Henrik Sundstroem will become chief financial officer early next month when the new chief executive, Carl-Henric Svanberg, takes over. The company also said that Chief Operating Officer Per-Arne Sandstroem, who has been praised for his management of the company's cost-cutting efforts, will become deputy CEO. Earlier Monday, Ericsson said it had settled a legal dispute with InterDigital Communications Corp., of King of Prussia, Pa., averting a potentially costly trial later this spring. At midday, Ericsson's American depositary receipts were up 87 cents, or 14%, at $7.29 on the Nasdaq Stock Market. Shares of InterDigital soared $5.08, or 27%, to $18.84, also on Nasdaq. Mr. Sundstroem, who has been vice president and general manager of Ericsson's global services unit, will replace Sten Fornell, who will leave the company at the end of the year. CEO Kurt Hellstroem, who announced his retirement a month ago, and Mr. Fornell were often criticized for not communicating well with investors and for not reacting quickly enough to the downturn in the telecom-equipment market. Analysts expressed relief that Mr. Sandstroem is remaining at the company after being passed over for the CEO job. He has far more experience in the telecommunications industry than Mr. Svanberg, who will join Ericsson after serving as CEO of Swedish lock maker Assa Abloy AB. Ericsson said Mr. Sandstroem will continue to oversee Ericsson's restructuring efforts. The company has shed more than 40,000 jobs over the past two years amid a sharp fall in sales. It is seeking to return to profitability sometime this year after two years of losses. "Now it's probably time for stage two of the restructuring process," said Thomas Langer, an analyst with WestLB Panmure. "So it's important for [Sandstroem] to stick around. The new CEO will need somebody to help him learn about the organization." However, Mr. Langer said the company still must deal with weak demand from wireless operators for new equipment. Ericsson has forecast that industry sales of equipment for wireless networks could fall as much as 10% in 2003 after declining 20% last year. "The Ericsson valuation will be driven by market conditions, and the market simply isn't something that the new management can change," said Mr. Langer. Meanwhile, under the agreement with InterDigital, Ericsson will pay the U.S. company $58 million for technology developed by InterDigital. The technology is used in mobile phones and equipment that Ericsson has sold for cellphone networks. Sony Ericsson, the joint venture into which Ericsson spun out its phone operations 18 months ago, will pay InterDigital royalties for the next four years based on the number of handsets that it sells. In return, InterDigital will drop a patent-infringement lawsuit that was set to go to trial in mid-May. InterDigital first filed its claims against Ericsson a decade ago and was seeking a percentage of the Swedish company's phone and systems sales stretching back to the early 1990s. "The good thing is that it's not a lot of money, although it is some money," Urban Ekelund, an analyst with Redeye in Stockholm, said of the settlement. "I didn't expect it to be billions of U.S. dollars or even hundreds of millions of dollars." An Interdigital spokeswoman said the company was happy to sign up Ericsson as a licensee. The Ericsson settlement will be a yardstick for royalty agreements that InterDigital has with other cellular companies, including Nokia Corp. and Samsung Corp., she said.