Telefonaktiebolaget LM Ericsson (ADR) (ERIC)

TMFinept (68.57) Submitted: 2/22/08 7:47 PM : Start Price: $14.17 ERIC Score: -2.52

I think that Ericsson is relatively undervalued at the moment. Even using very conservative future growth estimates and cashflow figures, it seems to me that Ericsson should be trading closer to $30. It's been a rough year for the company and I expect a couple more down the line, but the future for this company is still very bright indeed. The company is being excessively punished for what I think is temporarily poor performance and for management's apparently taciturn handling of the situation at hand. They run the business like typical, stout Swedes so there's minimal hand-holding (that's a good thing).

Ultimately, I believe that Ericsson is a well managed and conservatively operated, which is a good thing for shareholders. I think that the demand for network equipment is being underestimated and I think that Sony Ericsson's contribution to the company's income and potential growth is being overly discounted. It seems to me that Ericsson is presently where Nokia was 3 years ago in terms of expanding into third-world markets and suffering margin pressure. These are issues that the company is capable of dealing with and which, in a few years, will reveal themselves to be investments in future growth and margins.

Report this Post Replies: 0 | Reply | Permalink