It has been 86 days since ceo Hans Vestberg was fired from Ericsson. No ordinary replacement has been appointed. Photo: Lars Pehrson
86 days without annual ceo
It is 86 days ago Hans Vestberg was fired from Ericsson. Still no new manager in place. SvD Näringsliv counting the days as the proud but ailing Ericsson is without a regular chief executive officer.
Last week the profit warning, the Ericsson report which is presented now on Friday will be katastrofdålig. A compilation of Ericssonledningens köpfest of the company may become the next problemhärd for the long-suffering shareholders. Both the summer kicked-the head of Ericsson Hans Vestberg and representative Carl-Henric Svanberg has made a number of acquisitions during his time. Now warns stock analysts that SvD Näringsliv spoken with to billions in losses hidden in the company’s balance sheet.
– Over 65 billion over ten years has been spent on the strategy with bolagsköp that now with the benefit of hindsight, largely disappointments. Thus, should Ericsson be difficult to justify the large values it still takes up its balance sheet, says Martin Nilsson, an equity analyst at Nordea, who have followed the Ericsson for many years.
A jättekoloss which absorbs the outrageous costs just to stay in operation.
Ericsson’s many acquisitions has made to the company’s total surplus value in the form of intangible assets now amounts to 56 billion, of which the pure goodwill accounts for the largest share.
Goodwill is finansspråk for when a company pays more for a company than the book value of the actual assets. This surplus value can be justified by the company acquired, for example, has a strong brand, or is predicted a brilliant future. But the value of the goodwill and intangible assets must be adjusted down if the conditions change for the worse.
This has not been done in Ericsson.
The biggest företagsköpen made under the previous president and ceo, Carl-Henric Svanbergs time. Total spent Carl-Henric Svanberg over 45 billion u.s. dollars to sharpen Ericsson.
the Shops were already criticised for having been unsuccessful. And it has not gotten better. The acquisition of the american Redback manufactures internetroutrar and which Ericsson purchased for 13 billion in 2007, are described as miserable.
the Redback is today a jättekoloss which absorbs the outrageous costs just to stay in operation and they must soon do something about it, said a person with insight in the integration of Ericsson’s bolagsköp.
During His Vestbergs time was nothing to adjust down the value of Redback into Ericsson’s accounts.
– In the financial market expect the majority of the actors with the acquisition Ericsson has made will never ever generate any significant profits. Still seems goodwillvärdena remain despite the fact that at this point, should be able to demonstrate that they are too high. Only for Redback, it is around the 10 billion that need to be written off and perhaps just as much to the other. As around 20 billion, it is enough if, says Martin Nilsson, an analyst at Nordea.
the Company has in plain English a real skitprodukt.
Normally a company to be able to justify the size of its goodwill each year to demonstrate that they will generate money in the future. Something that is not the case with Ericsson.
– Too many companies that were bought have later fallen victim to internal politics and become basically useless, or so the technology has been poor. Sometimes stack all the founders/co-owners when they got Ericsson’s purchase price, and left only an empty shell behind, ” says a source with knowledge of the Ericsson acquisition.
Even the now president and ceo Hans Vestberg has bought several companies where the value of the day is questioned. Since 2010, Ericsson has added approximately 20 billion on acquisitions. The Swedish daily svenska dagbladet has talked with several people familiar with the purchases and the picture that these paints is not flattering.
Ericsson’s leadership has often acted in a panic to try and save up for the previous strategic miss.
An example is the u.s. company, Apcera, where Ericsson became the owner in 2014, and as it develops so-called cloud services, i.e. it services via the internet.
– Apcera has in plain English a real skitprodukt whose integration in the rest of the company’s product portfolio attracted a great deal of anger and frustration internally, ” says one technician at Ericsson.
the Common for the acquisitions is that they are always reactive and not based on any well thought-out strategy, mean sources to SvD.
“Ericsson’s leadership has often acted in a panic to try and save up for the previous strategic miss,” says a source.
such A deal pointed out, is the purchase of Envivio at the end of 2015, a company that works with software for the tv and that was listed on the Nasdaq.
But Ericsson has not only made bad acquisitions. Equally serious are the companies in which Ericsson is not bought up, as the competitors race ahead.
It has happened several times in the modes to Ericsson actively bought up something less thought-out that does not fit in neither technically or strategically. The cost is then much greater than goodwillförlusterna in the form of angry customers, lost business and all the internal research projects that have gone up in smoke, says a person with good transparency.
need to make write-downs, says Ericsson’s representatives not to make forecasts and to follow the applicable accounting rules.
– An impairment test is carried out during the fourth quarter of each year, as well as when there are indications of impairment, ” says Johannes Arvidson Persson at Ericsson’s press office.
The acting president and ceo Jan Frykhammar do not want to comment on what are the possible values that the shareholders had in recent years köpfest in the company, but refers to the fact that the company is in a silent period until the report on Friday.
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