Ericsson

Telefonaktiebolaget LM Ericsson, usually called Ericsson, is a Swedish company that works in networking and telecommunications, with its main office in Stockholm. It has played a big part in shaping the telecom industry and is a frontrunner in 5G technology. The company holds more than 57,000 patents and invented Bluetooth. Ericsson provides infrastructure, software, and services for telecom providers and businesses, including 4G and 5G cellular gear, plus IP and optical transport systems. It employs about 100,000 people and operates in over 180 countries. Its shares trade on Nasdaq Stockholm as ERIC.A and ERIC.B, and on the American Nasdaq as ERIC.

Founded in 1876 by Lars Magnus Ericsson, the company is now jointly controlled by the Wallenberg family through Investor AB and by Handelsbanken through Industrivärden. These two groups gained control of Ericsson’s high-vote A-shares after the Kreuger empire collapsed in the early 1930s.

Lars Magnus Ericsson got into telephones young, working as an instrument maker for a firm that built telegraph equipment for Sweden’s Telegrafverket. At age 30, in 1876, he and his friend Carl Johan Andersson opened a telegraph repair shop in central Stockholm, fixing imported phones. By 1878, he was making and selling his own telephone gear, though his designs weren’t technically groundbreaking. That same year, he agreed to supply phones and switchboards to Sweden’s first telecom operating company, Stockholms Allmänna Telefonaktiebolag.

As production grew in the late 1890s and the Swedish market neared saturation, Ericsson expanded abroad through agents. Early markets included the UK and Russia, where factories were later set up to win local contracts and boost output from Sweden. In the UK, the National Telephone Company became a major buyer; by 1897, 28% of Ericsson’s output went there. Nordic countries also bought from Ericsson, helped by the growth of Swedish phone services. Other regions, like Australia and New Zealand, became customers through their ties to parent countries; by the late 1890s, they were Ericsson’s biggest non-European markets. Mass production took hold, and phones lost some of their fancy decoration.

Despite success elsewhere, Ericsson struggled in the United States, where AT&T’s Western Electric, Kellogg, and Automatic Electric dominated. It eventually sold its U.S. assets. Sales in Mexico opened doors in South America, while South Africa and China also brought in significant business. With the company now multinational, Lars Ericsson stepped down in 1901.

Ericsson ignored the rise of automatic telephony in the U.S. and focused on manual exchange designs. Its first dial phone came out in 1921, but early automatic switching systems sold slowly until they proved themselves globally. Phones from this era had simpler designs and finishes; many early automatic desk models were magneto styles with a dial on the front and updated electronics, often decorated with elaborate decals. World War I, the Great Depression, and the loss of Russian assets after the Revolution slowed the company, and sales to other countries dropped by about half.

Buying other telecom companies strained Ericsson’s finances. In 1925, Karl Fredric Wincrantz took control by buying most shares, partly funded by financier Ivar Kreuger. The company was renamed Telefonaktiebolaget L M Ericsson. Kreuger later showed interest, becoming a major owner of Wincrantz’s holding companies.

Ericsson was saved from bankruptcy by banks including Stockholms Enskilda Bank (now Skandinaviska Enskilda Banken), other Wallenberg-controlled investment banks, and some Swedish government backing. Marcus Wallenberg Jr. negotiated a deal with several Swedish banks to rebuild the company financially. The banks gradually increased their holdings of LM Ericsson A-shares, while International Telephone & Telegraph (ITT) remained the largest shareholder. In 1960, the Wallenberg family bought ITT’s shares and has controlled the company ever since.

In the 1920s and 1930s, governments worldwide organized and stabilized telephone markets. The patchwork of town-by-town systems run by small private companies was integrated and often leased to a single operator.