L M Ericsson Co.-Question For Swedish Dopers

Factual Questions
1

I have a friend who has invested heavily in Ericsson ADRS-and as anybody who has followed the company knows-the stock has tanked! He has lost aboot 90% of his investment, and the company admits to making huge losses -around 21 billion Swedish ceowns last year!
I told him to get out, but he stubbornly insists that Ericsson has two thinks going for it:

  1. It has signed a deal to provide base stations fopr cellphones in China=that should be worth billions
  2. it is a large employer in Sweden-and the Swedish govt. would do anything to keep it from going under
    So, for our Swedish friends-is Ericsson going to make it? Or should I tell my friend to cut his losses?
2

There are probably better message boards than this one for this kind of info but here’s an article from Forbes.

Ericsson has taken its licks lately. But don’t underestimate Kurt Hellström

If Ericsson is really going down all the Swedish government can do is delay it, not prevent it.
Here’s a recent list of articles about Ericsson from Motley Fool

3

Let’s assume your friend invested $100,000US. So, it’s currently worth $10,000US. What would be the point of bailing now? Just to save the last 10%? If your friend is 60 years old, tell 'em to take the money. If they’re 30-40, stay the course.

4

I agree with your friends reasoning on both counts.
Noone here can really contemplate the thought of Ericsson going bankrupt, the general opinion is that the state will do everything necessary to keep them afloat. The main problem (imho) is that in Sweden large numbers of regular-joes buy and sell their stock over the net at home. These Svenssons are in many cases the puppets of the media, and the tabloids love nothing better than to run headlines of “This stock is going to bomb” (I paraphrase). In other words, any time the Ericsson stock goes up a bit some of these clowns go “Whee, I just saved back 50 bucks of my imagines loss, better sell now while the selling is good”, and they cause the stock to fall again. Regular Joe then thinks he is a very savvy man, got out just before it went down again phew :rolleyes:

I know nothing about the stock market, so I stay the hell out of it. Personally I think it would help a lot if either 1. the tabloids were banned from writing about Ericsson for the next 6 months, or 2. the stock was in some way “frozen” (don’t flame me, I know nothing!) to prevent people who don’t have a clue jumping in and out of the boat.

Much of the future of Ericsson feels like its in the hands of the Swedish people. If I had money I would be buying stock now and putting it away to look at in about 15 years. The fact that I am a pauper should tell you how relevant or useful my financial advice is.