For the financial year to December 31, L M Ericsson Telefon AB turned in pre-tax profits up 31% at the equivalent of $835m on turnover that rose 16% to $7,868m (CI No 1,633). Public telecommunications contributed 45% of revenues, radio communications 25%, cable and network 14% and business communications 11%. Geographically, turnover was represented mainly by Europe – 59%, of which Sweden accounted for only 12%; North America – 13%; and Latin America – 12%. The UK turned over UKP300m. Order bookings during the year totalled $8,500m, a 17% increase on 1989, and at the year-end, the order backlog was slightly up at $5,230m. Investment in research and development amounted to 11% of total revenues, 17% including other technical expenses – employees in research and development now total 6,200 in Sweden, 1,500 across the rest of Europe – 600 of which are located in the UK, 800 in North America and 200 in Australia. In the public telecommunications sector, Spain, Italy, Australia and Mexico contributed the largest increase in sales, although US shipments were also up. Radio communications reported strong growth in volume, owing to the upwards movement of the cellular phone market, particularly in the US and western Europe. Net sales in business communications were down, reflecting the sale of the Swedish marketing company to Televerket, the national telecommunications administration – trading income fell 41%, which the company puts down to weak economic conditions and severe price competition. The MD110 subscriber exchange, however, continued to sell well. The cable and network division, bolstered particularly by a good performance from Italy, reported a strong increase in net sales and trading profits. Ericsson reckons its success in telecommunications can be put down to the fact that it covers the three elements – radio, switching, and intelligent networks. The company now markets AXE digital exchanges in 80 countries, cellular phone systems in 44 countries, the MD110 digital PABX in 50 countries, and the DCT 900 digital wireless PABX system in 12. With 40% of the world telecommunications market, total assets up 15% at $8,113m, and the best year ever behind it, president and chief executive Lars Ramqvist is confident that Ericsson is well positioned to meet the demands of the future, but cautions that the weakening of the international economy and the impact of political developments around the world may make it difficult to sustain in the current year the results achieved in 1990.
