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  1. 2009 /
  2. April-June 09 /

Positive stance at Capital Markets Day

Ericsson President and CEO Carl-Henric Svanberg has reassured investors, analysts and the media that the telecom sector is resilient and will survive the current economic crisis.

May 11, 2009

Carl-Henric Svanberg and Hans Vestberg

Svanberg was the first of Ericsson’s top management team to speak at Capital Markets Day, the once-a-year event at which Ericsson explains its strategy and market position.

Svanberg noted the inclusion of access to broadband in stimulus packages in both the United States and China as proof that the basic need for telecommunications is driving growth in the world economy.

"Today broadband is at the turning point with infrastructure already widely available worldwide. However, we have not realized the full impact and potential that it will bring to society. Over the next 20 to 30 years, it will stimulate innovation across society and will lead to the deployment of completely new solutions," Svanberg said.

For five years, Ericsson has enjoyed good growth but while business is good, the company is being careful. “We have won major contracts, and several strategic orders on the managed services side,” said Svanberg. “All this is happening despite turmoil in the economy. Still, we are working on reducing costs to make sure we stay strong and leverage capabilities.”

One recent win is the LTE contract with Verizon Wireless. Ericsson will partner with the US-based operator to supply and integrate the next-generation technology LTE (Long-Term Evolution) network.

Tony Melone

Addressing the audience, Verizon Wireless CTO Tony Melone said, “When you think about the importance of 4G technology, cost points, growing the 3G network for capacity or the alternative of providing a 4G network –  it’s a no-brainer to aggressively launch LTE. It’s the dominant global standard.” He added that Ericsson was the right partner because it has led the standards discussions and it has the same “winning attitude” that Verizon Wireless has.

Chief Financial Officer Hans Vestberg also spoke, giving an overview of the numbers. “Right now it’s about cost and capital in order to have them in the right places. At the same time it’s a lot about governance of the company...being close to the customers and the business, so we can be responsive if things change quickly,” Vestberg said. He noted that Days Sales Outstanding had become longer than he would like and that restructuring costs were showing up on the balance sheet this time. “But overall the company’s financial position is strong,” Vestberg said.

Mark Sue, Managing Director of Technology Research for the Royal Bank of Canada, was among the guests.  He said: “We got some clear answers on their market position, ability to gain share, and take advantage of weakened competitors; but there are lingering questions about near-term dynamics: what the service providers are going to do, how they’re likely to spend. We still need clarifications on financial metrics – can they improve cash conversion, operating margins. I think Ericsson is still trying to improve on that.”

Capital Markets Day was held on May 7-9 in Boston, in conjunction with the Volvo Ocean Race stopover.

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