Ericsson looks for the hidden data pearl

NEWS Ericsson yesterday spelled out its future business strategy, claiming that focusing on wireless and IP (Internet Protocol) technologies will allow it to grow 20 per cent per year. Six months after taking the helm at the Swedish telecoms equipment manufacturer, CEO Sven-Christer Nilsson made some bold predictions about the company's future. In addition to being a top three supplier of wireline voice technology, Nilsson said the company will rank as one of the top three providers in the carrier-class, real-time IP segment of the wireline data market. Thomas Blonz, a telecoms analyst at Ovum, said: "Ericsson is in a good position. The data market will not be an easy one, but I'm not sure Ericsson will compete head-to-head with Cisco, Bay [now part of Nortel] and others." On the subject of corporate tie-ups, while the twin giants of Cisco and Lucent look set to carry on snapping up companies - with Cisco tipped to be the only large networking company to survive the current wave of consolidation - Nilsson said Ericsson would pursue a "selective acquisition policy". "We describe our acquisition strategy as a string of pearls approach," he said. "It focuses on small to medium-sized firms that are leading innovators. We think this is a much smarter strategy than pursuing a mega-merger, which would be prohibitively expensive and dilute earnings. The aim is to complement with certain technology - not necessarily to buy market shares." In early trading on Nasdaq Monday, Ericsson shares were up 13.5 per cent, adding over $3bn to the company's market value. However, the company's Scandinavian rival, Nokia, has still had the better year, posting strong results and bringing out well-received new products. Blonz said Ericsson's poor performance could be blamed on its network focus. Nokia is a smaller company with a greater emphasis on terminal technology.