Ericsson: Don't confuse Apax with Flextronics deal

NEWS This should not be seen as a part of a systematic rationalisation of the Swedish telephony manufactuers operations, pointed out a spokesman. "This is not to be confused with the outsourcing of the consumer electronics business," he explained. "This is not as drastic as the Flextronics [move]" The company has been pursuing a so-called 'back-to-profit programme'. Prior to the outsourcing of the manufacturing, there was much speculation that the Ericsson would divest the entire handset division in the face of diminishing margins. Venture capitalists Apax Partners Funds, which paid $480m for 80 per cent of Ericsson's direct enterprise sales, was attracted to both the technical know-how of the 2,400 employees and the customer base. These customers are those businesses large enough to buy telecoms equipment, such PBX boxes, networking systems and desk-phones, direct from the vendor. Apax makes no secret that this company will at some point be sold on. Other companies that Apax bought for future sale have included Thomson Directories, Her Majesty's Stationery Office (HMSO) and Bundesdruckerei, the German national stationary office. Ericsson does not anticipate that the move will upset customers. "On the contrary, we expect customer service to be improved," the spokesman added. The company will continue to manufacture telephony and networking kit for corporate customers but hopes to drive more of its sales through indirect channels. One new indirect partner is the European distribution arm of the US ASP FutureLink.