But there was more to come. The next capital markets day was held in New York on November 20.
Svanberg confirmed here that the trend in the West was for operators to cut back on their investments in networks, giving Vodafone, AT&T and Telecom Italia as examples. He said political instability in several developing countries that were important for Ericsson – a military coup in Thai¬land, disturbances in Pakistan and Bangladesh – was a cause for concern. He also mentioned that the US dollar, in which Ericsson was doing half of its business, was continuing to weaken.
“At the moment, we are building a lot of new networks and this will give us a bigger platform so margins will start to rise again during the second half of 2008 [and into] 2009 – all other things being equal.” He confirmed what he had already said on October 16: “The trend is clear. Data traffic in mobile networks is rising. The operators are enthusiastic about this development but concerned about the business model. We do not expect any major upgrades of networks because of increased data traffic in 2008.”
He forecast that invoicing in the fourth quarter would be somewhere towards the lower end of the SEK 53–60 billion range.
HUNT FOR HEADS
This time the reaction was a drop in the Ericsson share price of a further 11 percent. And now the hunt for heads was in full cry.
Investors in the US sued the company, claiming that Erics¬son’s management had waited too long before warning about the decline in profits. The Stockholm Stock Exchange decided to investigate whether Ericsson had broken its rules when Svanberg had presented information at a capital markets day that had an impact on the share price.
Pia Gripenberg, a financial journalist at Dagens Nyheter, was one of those who informed her readers that Ericsson “had made a mistake” in giving this information in New York and would be found guilty by the disciplinary board of the Stockholm Stock Exchange.
Both Dagens Industri and E24 asserted that Svanberg had already been dismissed. This was based on the words of an analyst, David Halldén at Chevreaux, who said: “I am convinced that Svanberg has already been sacked.”
“I believe he was sacked at the same time as Sundström but was given a soft landing, meaning a year to teach the crown prince taking over after him,” Halldén said. Under the headline “Stop sobbing, Svanberg”, E24 reporter Andreas Cervenka offered to travel to Kista with tissues for the unfortunate Ericsson executive.
Author: Svenolof Karlsson & Anders Lugn