The Sure Thing

To Americans, the telephone business is synonymous with A. T. & T. But in a score of other nations, those who want to buy anything from an office intercom system to a complete telephone exchange are likely to think first of Sweden's L. M. Ericsson Telephone Co. Last week Ericsson engineers were installing new telephone networks from Egypt to Iceland, and in Stockholm, company officials jubilantly announced a $20 million sale of automatic switching equipment to neighboring Denmark.

Ericsson has a long way to go before it catches up with A. T. & T.; its total assets ($316 million) are smaller than A. T. & T.'s profits ($358 million) for the second quarter of this year. But with the aid of a globe-girdling complex of 72 subsidiaries and associated companies, Ericsson last year increased its sales by 13% and its profits to $8,700,000.

Swindler's Sellout. Founded by Swedish Tinkerer Lars Magnus Ericsson 86 years ago, Ericsson Telephone has had a troubled history: Super-Swindler Ivar Krueger, who got control of the company in the late 1920s, sold off his interest in 1931 to Ericsson's archrival, the U.S.'s International Telephone & Telegraph Co. This evoked patriotic outcries in Sweden and led to the intervention of the brothers Marcus and Jacob Wallenberg, who between them head the boards of 24 Swedish companies with combined sales of $1.6 billion. Aided by a law that prohibits foreign control of Swedish firms, Marcus Wallenberg, 62, stepped in as Ericsson's chairman and fended off I. T. & T. so successfully that the U.S. company finally sold all its Ericsson stock two years ago.

Shrewd Banker Wallenberg, however, has restricted himself to overseeing Ericsson's finances. To handle company operations, he brought in as president Sven Ture Aberg, 58, an imperturbable electrical engineer who negotiates with uncommon skill in five languages (Swedish, English, Spanish, French and German).

National Duty. Sven Aberg has "undiversified" Ericsson by selling off most of the telephone operating companies it once owned overseas. "Foreigners never get a fair return from the rate setters," he shrugs. Instead, he has concentrated on expanding Ericsson's equipment sales abroad. "For a company in a small country which depends on exports," he says, "this is a national duty."

Aberg attributes Ericsson's success abroad to "good products and long patience." Ericsson's laboratories are famed for their imaginative designs--among them the "thinking" switchboard (which automatically repeats a call a little later if the first try gets a busy signal) and the Ericofon, a telephone that has earpiece, mouthpiece and dial all in one unit. Ericsson's salesmen have spent as long as six years in a new country making their pitch and landing their first contract. Each year the company brings nearly 100 foreign engineers to Stockholm to train them in the use of Ericsson equipment.

Since 1951, Ericsson has operated a U.S. subsidiary--the North Electric Co. of Galion, Ohio, which supplies many of the 4,000 small independent telephone companies in the U.S. and last year had sales of $35.9 million. But Aberg sees little hope of significantly expanding sales in the U.S., which already leads the world in number of telephones (40.8 per 100 inhabitants). His real hope is Western Europe, which, if it were to match the U.S. in phones per capita, could absorb 140 million more of them. Ericsson already has plants in three of the six Common Market nations. By Aberg's reckoning, a phone-packed Western Europe is "a sure thing in the long run."

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