Ericsson in the New Millennium

The US had been one of Ericsson's strong markets. With falling sales in the US market and failure to compete in the Asian markets, Ericsson was in a lot of trouble. In a statement released in 2001, the company said, "The current economic slowdown, in particular in the US, has increased the uncertainty about the growth rate in the entire information technology sector." In the Asian markets, Ericsson was also facing tough competition from many Asian companies, such as Samsung and LG, that had entered the mobile handset business in a big way, and were in a race to provide them at the lowest prices. Between 1999 and 2000, many European telecom operators interested in expansion had taken enormous loans running into billions to buy licenses and acquire other telecom companies...

Exactly a year earlier, for the same period the company had incurred losses to the tune of $566.9 million. This was therefore, an outstanding performance from a company that had been struggling miserably for the last two years. In the first quarter of 2004, Ericsson experienced 9% growth in sales to a level of $3.7 billion, and a major share of this growth was in markets in Mexico, China and Brazil. The major contributor to Ericsson's growth was Ericsson's mobile systems, which contributed $2.77 billion in sales. Services from Ericsson contributed $540 million, while equipment for wireless systems contributed $118 million and other operations of Ericsson provided $316 million. But the real sign of recovery for Ericsson was that by the end of 2003, the company was operating on gross margins of 41.6²³ %...