Ericsson CEO: ‘It’s brutal out there’

Ericsson CEO Carl-Henric Svanberg added his voice to the growing chorus of business leaders with concerns about the state of the world’s financial markets.

Ericsson CEO: 'It's brutal out there'

“It’s naturally been bewildering for everyone and been more difficult and deeper than anyone could have believed,” Svanberg is reported as saying by the Dagens Industri newspaper.

The comments came at a leadership seminar arranged by the magazine Chef (‘Boss’) on Thursday during which the head of the telecoms giant faced questions about the current state of the markets and what it might mean for Ericsson.

Despite his concerns, Svanberg steered clear of predicting any doomsday scenarios.

“It looks really brutal out there right now, but it’s clear that we’re going to get through this,” he said.

“It’s obvious that the whole of society is affected right now in different ways, but it’s not the end of the world, but a correction.”

However, Svanberg admitted that the correction which was meant to “clean out all of the idiocy that shouldn’t be there” has become “quite frightening” due to the domino effects created by the financial industry’s ever more complicated and interrelated methods.

He was also confounded by a stock market characterized by investors who feel forced to sell, yet no one seems to want to buy.

“It’s strange behaviour,” he said.

“I believe we are all witnesses to something which doesn’t hold water. You can draw conclusions and reflect. There is some sort of dramatic drop in confidence in financial markets and stocks, and people who are selling out of necessity. I don’t think you can draw any major conclusions yet.”

Svanberg was reluctant to project exactly how the current financial crisis might affect different industries or Ericsson in particular, but he hinted that there is reason for hope when it comes to the future of the telecommunications industry.

“As we’ve stated several times, [telecoms] operators are financially strong – they have money, which wasn’t the case eight years ago,” he explained, referring to the 2000 telecoms crash which hit Ericsson especially hard.

The company laid off thousands of employees and ultimately had to spin off its handset division in a joint venture with Sony.

But Svanberg cautioned that the effects of the crisis have yet to play themselves out.

“There are fundamentally better conditions [in the telecoms sector], but we’ll have to wait and see how the financial crisis ends up affecting consumers,” he said.


Ericsson suspends all Russia operations indefinitely

Swedish network equipment maker Ericsson said Monday that it was suspending all of its Russian operations over the war in Ukraine for the foreseeable future.

Ericsson suspends all Russia operations indefinitely

The telecom giant already announced in late February that it would stop all deliveries to Russia following Moscow’s February 24 invasion of Ukraine.

“In the light of recent events and of European Union sanctions, the company will now suspend its affected business with customers in Russia indefinitely,” Ericsson said in a statement.

The company added that it was “engaging with customers and partners regarding the indefinite suspension of the affected business.”

“The priority is to focus on the safety and well-being of Ericsson employees in Russia and they will be placed on paid leave,” it said.

READ ALSO: How has Sweden responded to Putin’s war in Ukraine so far?

Hundreds of Western firms ranging from Ikea to Coca-Cola, Goldman Sachs and McDonald’s have stopped operations in the country since the invasion, with French banking group Societe Generale announcing Monday it was selling its stake in Russia’s Rosbank.

Ericsson has around 600 employees in Russia, and is a “major supplier to the largest operator MTS and the fourth largest operator Tele2,” a company spokeswoman told AFP, adding that together with Ukraine, Russia accounts for less than two percent of revenue.

As a result, the equipment maker said it would record a provision for 900 million Swedish kronor ($95 million, 87 million euros) for the first quarter of 2022 for “impairment of assets and other exceptional costs,” though no staff redundancy costs were included.
Ericsson is due to publish its first quarter earnings on April 14.