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July 2, 1987

TOUGH TALK FOR L M ERICSSON MANAGERS

By CBR Staff Writer

Despite sharpening competition among the world’s leading telecommunications companies, L M Ericsson has succeeded in making breakthroughs on new markets in Europe and the US as well as increasing its market share in a number of important industrial countries, including Spain, the Netherlands and Switzerland, a meeting of 300 key managers from 90 countries heard in Stockholm this week. The company forecast that the total volume of AXE lines installed in 1990 would reach 4.8m compared with 3.2m during 1986 and 2.9m in 1985. The successes we have achieved have not been painless, said chief executive Bjorn Svedberg gloomily: our balance sheet has improved during the past year but the simultaneous programmes in the US and the UK require large amounts of money and are depressing our earnings. Many of us have direct personal experience with the problems involved in conducting a number of major development projects at the same time. We are experiencing how the ongoing structural changes involving a process of elimination in the telecommunications industry are depressing our margins to a greater extent than previously. Svedberg maintained that as a result of this development combined with the relatively slow rate of improvement in certain of Information Systems’ markets and the problems being faced in the US cable market, improvement in profitability is proceeding too slowly. Ericsson’s long-term strategy is to concentrate increasingly on the markets and product areas in which it is the strongest, said Svedberg.

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