Ericsson is an international corporation that provides services and products to telecom operators in areas such Internet network infrastructure and multimedia solutions. The company operates in 175 countries and employs over 100,000 people. The company’s head office is located in Stockholm.
Lars Magnus Ericsson and the origins of the company
The company was founded in 1876 in the Swedish capital of Stockholm by Lars Magnus Ericson. Lars lived from 1846 to 1926. He was a Swedish inventor, entrepreneur and founder of Ericsson, which of course took the name from his name.
Lars Magnus Ericsson was born in Värmskog and grew up in a small village Vegerbol between Karlstad and Arvika. At the age of 12, his father died, which forced him to seek work as a miner. He worked until he collected enough money to leave the village and move to Stockholm in 1867. For six years he worked at Öllers & Co., which mainly produced telegraphic equipment. Due to his skills, he received two state scholarships for foreign studies in 1872-1875.
On his return to Sweden in 1876 he founded a small mechanical workshop with his friend Carl Johan Andersson, who also worked at Öllers & Co. The workshop was a converted 13 m2 kitchen located in Drottninggatan, Stockholm’s central district. He started working with Bell and Siemens. By the way, he made his own copies of their design. However, it was only in cooperation with Henrik Tore Cedergren in 1883 that Ericsson developed.
In 1900 Lars Magnus withdrew from Ericsson at the age of 54. He held his shares in the company until 1905, and then sold them all. It is said that he was a demanding man and did not like much praise. He was deeply respected by his staff. He was always skeptical and cautious in business. He had no problem copying his products from the competition, which was possible because patent law was not very effective. When his phones were copied by Norwegian companies, he did not care too much because his phones were copied from Siemens. At first, he did not believe in the mass market of mobile phones and thought it was a toy for the upper class.
As production increased significantly in the late 1900s and the Swedish market seemed saturated, Ericsson expanded its activities to foreign markets. In the UK and Russia, markets were still at an early stage. Ericsson’s factories helped to increase the chances of winning local contracts. Still, the Scandinavian countries were a big market for Ericsson.
Other countries such as Australia and New Zealand at the end of the 19th century were the largest non-European markets of Ericsson. Mass production at this time has accelerated. Only the appearance of the phone ceased to count., which previously served as a piece of furniture.
Despite its success in many parts of the world, Ericsson has not achieved significant sales in the United States. Bell, Kellogg and Automatic Electric dominated the US market. Ericsson eventually withdrew from the United States. The company has done well in South Africa and China, and these markets have provided significant sales to the company.
Ericsson ignored the growth of automated telephony in the United States and concentrated on existing projects. The first cell phone was manufactured in 1921. Although the sales of this type of phone was quite small, it was increasingly gaining global markets. In addition, World War I, then Great Depression, slowed down the company’s growth and limited sales to countries such as Australia.
Change of company owners
As mentioned above, the founder of Lars Magnus Ericsson left the company in 1900. However, the company continued to operate and even took over other telecom companies, which put pressure on the company’s finances. In 1925 Karl Fredrick Wincrantz took control of the company, gaining most of the shares. Wincrantz was backed up by Ivar Kreuger, an international financier. The company was renamed LM Ericsson.
In 1928, Ericsson began to issue “A” and “B” shares. The share of “A” series shares was equal to 1000 votes against “B” series shares. Wincrantz controlled the company with only a few “A” shares, not a majority stake. The company acquired capital, mainly publishing series “B” shares.
In 1930, the second issue of “B” took place, and Kreuger took over most of the control of the company with shares of series “A” and “B”, which he bought for the money given by LM Ericsson. He then took out a loan for his own Kreuger & Toll company from ITT Corporation, securing a portion of LM Ericsson’s shares.
Kreuger used the company as collateral for many loans. Despite significant profits, he was unable to return them. Kreuger has invested in some doubtful stock offerings whose losses were significant. The banking institutions forced Kreuger to secure his loans. Kreuger was unable to repay $ 11 million and committed suicide in Paris in 1932. ITT held a third of Ericsson’s shares but was not allowed to manage the company due to its statute saying that no foreign investor could control more than 20% of the vote.
Ericsson has been saved from bankruptcy by the Wallenberg family and with the support of the government. Many of the Swedish investment banks, Ericsson’s creditors, were controlled by the Wallenberg family, which allowed Marcus Wallenberg Jr. Negotiate an agreement with several Swedish banks to rebuild the company financially. Banks gradually increased their holdings of LM Ericsson shares, while ITT was still the largest shareholder. In the 1960s, the Wallenberg family bought shares in Ericsson from ITT, and since then has controlled the company.
In 1956, Ericsson introduced the first fully automated mobile telephony system, the MTA. In 1960, the world’s first hands-free telephones were released. In 1954, a product called Ericofon, a cross-over device was introduced, which has been used in telephone administrations in many countries.
In the 1990s, during the rise of the Internet, there was a general opinion that Ericsson was too slow to enter the new era compared to its potential. But in 1995 the company created an innovative online project called Infocom. The system utilized the capabilities of fixed-line telecommunications and IT.
In conjunction with Ericsson’s other mobile standards such as D-AMPS and PDC, the rise of the Global System for Mobile Communications meant that at the beginning of 1997 Ericsson had about 40% In the global mobile market, approximately 54 million subscribers.
Ericsson on the stock market
The company is listed on the Stockholm Stock Exchange acquired by Nasdaq. The stock market is now called Nasdaq Stockholm and is part of the Nasdaq Nordic, which brings together the Scandinavian and Baltic exchanges.
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