MCI INTERVIEW
Sony Ericsson, of course, is far
more established and does not have the luxury of the kind of grace period afforded a fledgling operation. Pressed for comment on the handset player, Frykhammar defers to its CEO Bert Nordberg, saying only that “we want it to turn around. That’s the first and most important target.” What will happen if that turnaround doesn’t ma- terialise remains to be seen, although Frykhammar says that the only reason he and Hans Vestberg were not at the Sony Ericsson press conference in Barcelona was that they were busy rehearsing their own presentation. Sony had no event of its own and so made its presence felt at its offspring’s announcement. “We still think that both Ericsson
and Sony, in Sony Ericsson, have a lot to offer,” he says. “And we hope that consumers feel that, too. Through Sony with its media and its consumer elec- tronics expertise, and with Ericsson’s engineering and mobility leadership, we have a great asset,” he says. Ericsson has effected something
of a turnaround of its own as it has worked to reduce headcount and increase efficiencies throughout its operations. The firm cut 5,000 staff last year and is expected to shave another 1,500 from the roster during 2010. But, says Frykhammar, the headline cost management programme that Erics- son has been trumpeting in recent times will be concluded this year. “I think we will always look for ef-
ficiencies and synergies but we feel that we want to put an end to that programme from an external commu- nications perspective and start to look at the P&L in the normal way again; which means not excluding restruc- turing costs and things like that,” he says. Efficiencies have to be designed into products and working practices, he explains, citing a new base station product, the RBS6000, which Ericsson says will require less manufacturing resources to produce.
career history
Jan Frykhammar is executive vice president and chief
financial officer at Ericsson. Prior to taking up this position (and since January 2008) Frykhammar was senior vice president and head of the Global Services business unit. He joined Ericsson in 1991 and has held various positions such head of sales and business control in that unit, CFO in North America and vice president, finance and commercial within the Vodafone Global Customer Account. Frykhammar holds a degree in business administration and economics from the University of Uppsala.
Reactive cost management will play
a role as well. “There are always ad- justments up and down in the size of the organisation because of business volume, if we lose a contract, although we always hate to lose. Last year there were a couple of examples of that and you have to readjust,” he says. “Or in- dividual markets may have problems. Spain, for example, has had a hard couple of years because the country is in financial trouble. So we’ve adjusted the size of our organisation there to reflect that. But an adjustment like that is not included in the efficiency programme that we communicate to the market.” Likewise there are times when Erics-
son has to take more staff on board. The firm leads the managed services market in the mobile industry and new deals in this space frequently involve the absorption of carrier staff and associ- ated costs. The Global Services business unit at Ericsson employed 8,000 people when it was formed in 2003. Today its headcount exceeds 40,000. “The top line growth is there and we have to recruit,” Frykhammar says. The cost pressures on Western ven-
dors like Ericsson are due in no small part to the recent success of Chinese companies like ZTE and Huawei. Able to marshal enormous R&D resources and offer products and services at aggressively competitive rates, these two companies have changed the face
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of the infrastructure market. They also have the luxury of enormous credit lines from the Chinese state banks, enabling them to offer attractive ven- dor financing deals to operators keen to restrict their capex in a difficult economic climate. So does this give Frykhammar cause for concern? “Ericsson has very good support
from the Kingdom of Sweden,” he says in response. “They back us so that any bank can lend money to an operator under the guarantee of the Export Credit Agency of Sweden. We have always done a lot of export credit financing as part of our busi- ness, it’s nothing new for us. Ericsson doesn’t carry a large amount of the risk because that goes to Sweden or Canada, or wherever, because we’re using ECAs in the countries where we export from.” And some operators, if not all of
them, are starting to spend, says Frykhammar. “We have been extremely successful in early LTE contracts. We have close to 300 million subscribers covered by the LTE networks that we have won so far because we are the major supplier to Verizon for LTE. Those operators with CDMA2000 networks are in a hurry to launch LTE. The fundamentals are there and our ability to make money and be successful is centred on the fact that we need to continue to stay in the lead when it comes to installed base and market share.” It’s difficult to imagine that opti-
mism in this industry will ever again be anything but cautious but there is a sense that momentum is gathering once again. “This has been the worst financial crisis, perhaps, that there has ever been,” says Frykhammar. “So in a way we planned for being more impacted than we have been. Now I see in discussions with operators a focus on quality and on how we can work together growing the top line. So in a way it is more optimistic. It’s not all about cutting cost and capex.” n
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