Anaconda-Ericsson

Intrapreneurship: Anaconda-Ericsson Finance & Leasing Inc.

Anaconda-Ericsson Inc. was a JV between LM Ericsson and ARCO

Anaconda-Ericsson Inc. was formed as a joint venture between Atlantic Richfield/ARCO’s Anaconda Copper Subsidiary and the Swedish Telecommunication Giant L.M. Ericsson in 1980. These two parent companies had previously been partners in a copper mining interest in the western hemisphere. The products of this venture were ARCO’s Anaconda’s mining cables and L. M. Ericsson’s PBX equipment and transmission systems. (Anaconda-Ericsson would later market computers and other business-oriented products from Ericsson’s Information Systems.)

The transmission operations of Anaconda-Ericsson Inc. had a successful start because new carriers of long-distance networks such as MCI needed equipment. Anaconda-Ericsson Inc.’s sales of MCI equipment were the right product at the right time, with captive financing in place to make the sale easier by implementing a short selling cycle. Anaconda-Ericssons’ sales of $100’s of millions in MCI equipment was accelerated by the creation of a captive Western Hemisphere Finance and Leasing subsidiary.

In early 1981 Anaconda-Ericsson Inc. reached out to meet with an outside computer marketing expert and management consultant, Howard Edward Haller. Haller was known for his solid marketing and finance experience. Haller was hired to sell off the existing AXXA Computer inventory and review the viability of the present US acquisitions of AXXA Corporation (manufacturer of word processing systems built to compete against the Wang Computer). Haller successfully sold off the entire existing AXXA inventory to AT&T and Pacific Bell.

A “de novo” Intrapreneurial Venture

Then, based on the announcement by IBM of their new 16 bit state-of-the-art IBM Personal Computer, Haller recommended shutting down AXXA. He then presented a formal business plan to create a western hemisphere captive finance and leasing subsidiary for Anaconda-Ericsson Inc., ARCO and L. M. Ericsson. Haller would design and create “de novo” an intrapreneurial venture “Western Hemisphere Finance and Leasing Subsidiary” to finance the sales of the ARCO’s products internationally. Anaconda-Ericsson Inc.’s Board of Directors and the Managing Directors approved the business proposal and appointed Haller the Managing Director (the European title for Chairman and CEO) of the new wholly owned subsidiary, Anaconda Ericsson Leasing and Finance Inc.

Anaconda-Ericsson Leasing & Finance Inc. was able to borrow well over $500,000,000 on a non-recourse basis from a group of major banks (similar to what was done by PR1ME Leasing) to fund Anaconda Ericsson’s Leasing and Finance with only a minimal investment by Anaconda-Ericsson Inc. No parent companies (ARCO or L. M Ericsson) guarantees on the bank debt were necessary to fund the newly created innovative captive equipment leasing subsidiary. In addition to bank debt, Anaconda- Ericsson Leasing & Finance Inc. also used “SEK debt” (Swedish Ex-IM Bank funding for export sales as the debt sources at low interest rates) to structure leverage leases and increase Anaconda-Ericsson Inc.’s sales and the Anaconda-Ericsson Finance and Leasing subsidiary’s sales and profits.

Anaconda-Ericsson’s Leasing and Finance Inc. was able to finance over $600 Million of Anaconda-Ericsson’s equipment in only 36 months, primarily on leasing or financing the L. M. Ericsson’s MCI equipment and Anaconda Wire & Cable equipment.

At the same time that Anaconda-Ericsson Inc. was utilizing intrapreneurial ventures to build their company, Apple Computer was also using intrapreneurship for the creation of Apple’s Macintosh computer. Intrapreneurship had now become a moving force in helping firms grow within the United States and around the world.

Howard Edward Haller, Ph.D. is a Professional Keynote Speaker on Intrapreneurship, Corporate Entrepreneurship, Intrapreneurship Program Creation, Using Intrapreneurship Programs as a strategic tool for Recruiting and Retaining Key Employees, and Using Intrapreneurship to Increase Innovation and Foster Creativity.

Unlock the creative power of intrapreneurship within your organization!

Email Dr. Haller directly at: DrHaller@IntrapreneurshipInstitute.com