Ericsson reports fourth quarter results.
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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

January 25, 2010

LM ERICSSON TELEPHONE COMPANY

(Translation of registrant’s name into English)

Torshamnsgatan 23, Kista

SE-164 83, Stockholm, Sweden

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.     Form 20-F   x     Form 40-F   ¨

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ¨    No  x

 

 

Announcement of LM Ericsson Telephone Company, dated January 25, 2010 regarding “Ericsson reports fourth quarter results.”


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LOGO

FOURTH QUARTER REPORT

January 25, 2010

ERICSSON REPORTS

FOURTH QUARTER RESULTS

 

  

•        Sales in quarter SEK 58.3 (67.0) b, -16% for comparable units

 

•        Sales full year SEK 206.5 (208.9) b, stable for comparable units

 

•        Operating income1) excl JVs SEK 7.5 (9.0)2) b, full year SEK 24.6 (23.4) b

 

•        Operating margin1) excl JVs 13% (13%)2), full year 12% (11%)

 

•        Share in earnings of JVs1) SEK -0.4 (-0.6) b, full year SEK -6.1 (0.4) b

 

•        Income after financial items1) SEK 6.7 (9.5) b, full year SEK 18.8 (24.8) b

 

•        Restructuring charges excl JV of SEK 4.3 (2.3) b, full year SEK 11.3 (6.7) b

 

•        Net income SEK 0.7 (4.1) b, full year SEK 4.1 (11.7) b

 

•        Earnings per share SEK 0.10 (1.21), full year SEK 1.14 (3.52)

 

•        Cash flow3) SEK 13.6 (7.9) b, full year SEK 28.7 (22.1) b

 

•        The Board of Directors proposes dividend of SEK 2.00 (1.85) per share

  

 

1)      Excluding restructuring charges

2)      Excluding capital gain of SEK 0.8 b from divested Symbian shares in the fourth quarter 2008

3)      Excluding cash outlays for restructuring cost that has been provided for of SEK 1.1 (1.0) b and dividends from Sony Ericsson of SEK 3.6 b for the full year 2008

   CEO COMMENTS

SALES BY QUARTER

2008

AND 2009 (SEK B)

 

LOGO

  

“During the second half of 2009, Networks’ sales were impacted by reduced operator spending in a number of markets. Group sales for the full year were less affected and the operating margin increased slightly,” says Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC). “We maintained market shares well in all segments, cash flow was good and our financial position is strong. The services business performed well, and our joint ventures remain on track to return to profit.

 

The shift from voice telephony to mobile broadband investments continues. Users and traffic are increasing rapidly and will eventually connect billions of people to the internet. As previously stated, with this shift follows the anticipated decline in GSM sales, accelerated by the current economic climate, which is not yet offset by the growth in mobile broadband and investments in next-generation IP networks.

 

Current operator investment behavior varies between regions and countries. During 2009, operators in a number of developing markets, especially Central Europe, Middle East and Africa, became increasingly cautious with investments. Meanwhile, other markets including China, India and the US continued to show good development with major network buildouts. There is also a continued strong demand for services targeting the operational efficiency of operators, such as managed services and consulting.

 

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During the year, we significantly strengthened our position in North America with key wins in both our networks and services businesses such as LTE to Verizon and Metro PCS and services to Sprint. The confidence TeliaSonera has shown in us by selecting our LTE solutions in the beginning of this year further confirms the technical quality of our solutions and strong services portfolio.

 

For 2010 we are determined to increase our efforts to combine our strong technology leadership position and service capabilities to provide value to our customers and ensure our continued healthy financial development,” concludes Hans Vestberg.

FINANCIAL HIGHLIGHTS

Income statement and cash flow

 

     Fourth quarter     Third quarter     Full year  

SEK b.

   2009     2008     Change     2009     Change     2009     2008     Change  

Net sales

   58.3      67.0      -13   46.4      26   206.5      208.9      -1

Net sales for comparable units

   55.6      65.9      -16   46.4      20   203.8      203.7      0

Gross margin

   35   35   —        36   —        36   37   —     

EBITDA margin excl JVs

   17   16 %1)    —        16   —        16   15   —     

Operating income excl JVs

   7.5      9.0 1)    -16   5.5      37   24.6      23.4      5

Operating margin excl JVs

   13   13 %1)    —        12   —        12   11   —     

Income after financial items

   6.7      9.5      -30   4.0      68   18.8      24.8      -24

Net income

   0.7      4.1      -82   0.8      -6   4.1      11.7      -65

EPS diluted, SEK

   0.10      1.21      -92   0.25      -60   1.14      3.52      -68

Adjusted cash flow2)

   13.6      7.9      —        6.9      —        28.7      22.1      —     

Cash flow from operations

   12.5      7.0      —        5.7      —        24.5      24.0      —     

All numbers, excl. EPS, Net income and Cash flow from operations, excl. restructuring charges

 

1) Excluding a capital gain of SEK 0.8 b. from divested Symbian shares in the fourth quarter 2008
2) Cash flow from operations excl. restructuring cash outlays that has been provided for. Cash outlays in the quarter of SEK 1.1 (1.0) b. For the full year, cash outlays of SEK 4.2 (1.8) b and dividends from Sony Ericsson of SEK 3.6 b for 2008 are excluded

 

  

Sales in the quarter were -16% lower year-over-year for comparable units, i.e. excluding Ericsson Mobile Platforms and the acquired Nortel CDMA and LTE business in North America, and decreased -20% adjusted also for currency exchange rate effects and hedging. The acquired Nortel business contributed sales of SEK 2.7 b. in the quarter. The fourth quarter 2008 was comparatively strong and was also affected by net positive currency exchange rate effects.

 

For the full year, sales for comparable units were stable but decreased -9% adjusted for currency exchange rate effects and hedging. Decreased sales in Networks were not fully offset by increased sales in Professional Services.

 

The gross margin was down slightly sequentially due to product mix and effects from the reduced scope in a managed services agreement in Italy and the Sprint contract. Gross margin year-over-year was flat in the quarter as well as for the full year, affected by a higher proportion of services as well as efficiency gains and restructuring effects.

 

Operating expenses amounted to SEK 14.0 (15.3) b. in the quarter, excluding restructuring charges. This includes operating expenses from the acquired Nortel business. The year-over-year reduction is primarily a result of ongoing cost reduction activities, offsetting negative impact from currency exchange rate effects. Full year operating expenses amounted to SEK 52.9 (56.3) b., also positively affected by the ongoing cost reduction activities.

 

Other operating income and expenses were SEK 0.9 (1.5) b. in the quarter.

 

Ericsson Fourth Quarter Report 2009    2


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Operating income, excluding joint ventures and restructuring charges, amounted to SEK 7.5 (9.0) b. in the quarter, including positive contribution from the acquired Nortel business. Operating margin was 13% (13%) in the quarter, despite lower year-over-year sales and was flat sequentially as a result of the ongoing cost reduction activities.

 

For the full year, operating income, excluding joint ventures and restructuring charges, amounted to SEK 24.6 (23.4) b. and the margin was stable 12% (11%) despite lower volumes.

 

Ericsson’s share in earnings of joint ventures amounted to SEK -0.4 (-0.6) b. in the quarter excluding restructuring charges, compared to SEK -1.5 b. in the third quarter. This is a significant sequential improvement from ongoing efficiency programs and improved sales and margins in Sony Ericsson. Restructuring charges in joint ventures were SEK 1.0 b in the quarter. For the full year, Ericsson’s share in earnings of joint ventures amounted to SEK -6.1 (0.4) b., excluding restructuring charges.

 

Financial net was SEK -0.4 (0.3) b. in the quarter, mainly due to lower interest rates and negative currency revaluation effects on financial assets and liabilities.

 

The tax rate for 2009 was 34% (32%) mainly due to a lower tax percentage rate from the loss making joint venture companies. The tax rate excluding Sony Ericsson and ST-Ericsson was 26%.

 

Net income amounted to SEK 0.7 (4.1) b. in the quarter. For the full year, net income was SEK 4.1 (11.7) b. and earnings per share were SEK 1.14 (3.52).

 

Adjusted cash flow amounted to SEK 13.6 (7.9) b. in the quarter, up sequentially from SEK 6.9 b. Adjusted cash flow for the full year amounted to SEK 28.7 (22.1) b., reflecting focus on capital efficiency. Full year cash conversion rate was 117% (92%).

 

Trade receivables increased by SEK 4.0 b in the quarter to SEK 66.4 (62.4) b., impacted by seasonally higher sales. Despite the higher sales, days sales outstanding (DSO) improved sequentially to 106 (118) days, mainly due to strong collections.

 

Inventory was reduced by SEK -4.1 b. in the quarter to SEK 22.7 (26.8) b. and turnover improved sequentially to 68 (77) days, mainly due to customary year-end project completions.

 

Ericsson Fourth Quarter Report 2009    3


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BALANCE SHEET AND OTHER PERFORMANCE INDICATORS   

SEK b.

   Dec 31
2009
    Sep 30
2009
    June 30
2009
    Mar 31
2009
    Dec 31
2008
 

Net cash

   36.1      33.9      27.9      22.9      34.7   

Interest-bearing liabilities and post-employment benefits

   40.7      45.9      47.6      41.2      40.4   

Trade receivables

   66.4      62.4      69.4      75.2      75.9   

Days sales outstanding

   106      118      121      124      106   

Inventory

   22.7      26.8      29.0      30.7      27.8   

Of which market unit inventory

   12.9      15.9      17.7      18.9      16.5   

Inventory days

   68      77      78      83      68   

Payable days

   57      57      59      65      55   

Customer financing, net

   2.3      2.7      3.1      2.8      2.8   

Return on capital employed

   4   4   5   7   11

Equity ratio

   52   52   51   52   50

 

  

The net cash position increased by SEK 2.2 b. in the quarter to SEK 36.1 (33.9) b. Cash, cash equivalents and short-term investments amounted to SEK 76.7 (79.8) b. Gross cash decreased slightly in the quarter due to payments made for the acquisition of the Nortel business of SEK 8.3 b. and repayment of a callable bond of EUR 471 m. However, this was offset by a positive cash flow from operating activities of SEK 12.5 b.

 

Customer financing remained low at SEK 2.3 (2.7) b.

 

During the quarter, approximately SEK 2.6 b. of provisions were utilized, of which SEK 1.1 b. related to restructuring. Additions of SEK 3.6 b. were made, of which SEK 1.9 b. related to restructuring. Reversals of SEK 1.2 b. were made.

 

COST REDUCTIONS

 

In January, 2009, cost reduction activities were initiated, targeting annual savings of SEK 10 b. from the second half of 2010 split equally between cost of sales and operating expenses. Related restructuring charges were estimated to SEK 6-7 b.

 

In the third quarter 2009, it was reported that the program was ahead of plan and additional opportunities for efficiency improvements had evolved during the program and would lead to further cost savings, with related charges, during the last three quarters of the program.

 

The program is planned to be completed by the second quarter 2010 and it is now estimated that the total annual savings of the entire program will amount to SEK 15-16 b. from the second half of 2010. Related total restructuring charges are estimated to SEK 13-14 b.

 

In the fourth quarter, restructuring charges, excluding joint ventures, amounted to SEK 4.3 b., resulting in a total of SEK 11.3 b. for the full year. At the end of the quarter, cash outlays of SEK 4.3 b. remain to be made.

 

When the initial program was announced in January 2009, it was anticipated that the actions would result in a reduction of the number of employees by some 5,000, of which about 1,000 in Sweden. The 5,000 has been exceeded and is estimated to reach approximately 6,500.

 

Ericsson Fourth Quarter Report 2009    4


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     2009    2008

Restructuring charges, SEK b.

   Full year    Q4    Q3    Q2    Q1    Full year
                 

Cost of sales

   -4.2    -1.7    -0.8    -1.3    -0.4    -2.5

Research and development expenses

   -6.1    -2.3    -1.8    -1.7    -0.3    -2.7

Selling and administrative expenses

   -1.0    -0.3    -0.1    -0.6    —      -1.5

Total

   -11.3    -4.3    -2.7    -3.6    -0.7    -6.7

SEGMENT RESULTS

 

     Fourth quarter     Third quarter     Full year  

SEK b.

   2009     2008     Change     2009     Change     2009     2008     Change  

Networks sales

   38.5      45.8      -16   30.3      27   137.1      142.0      -3

Of which network rollout

   6.7      7.6      -12   5.8      15   23.1      21.5      7

EBITDA margin

   17   17   —        15   —        15   16   —     

Operating margin

   13   14   —        11   —        11   11   —     

Professional Services sales

   16.5      16.2      2   12.8      29   56.1      49.0      15

Of which managed services

   5.1      4.3      19   3.6      43   17.4      14.3      22

EBITDA margin

   16   19   —        17   —        17 %1)    17   —     

Operating margin

   13   18   —        15   —        15 %1)    16   —     

Multimedia sales2)

   3.4      3.9      -14   3.4      0   13.3      12.7      5

EBITDA margin2)

   20   5   —        19   —        16   8   —     

Operating margin2)

   10   -2   —        11   —        8   0   —     

Sales from divested and transferred businesses

   0.0      1.1      —        0.0      —        0.0      5.2      —     

Total sales

   58.3      67.0      -13   46.4      26   206.5      208.9      -1

All numbers exclude restructuring charges

 

1) SEK 0.8 b. adjusted for divestment of TEMS in the second quarter 2009
2) 2008 and 2009 numbers for Multimedia exclude divested Ericsson Mobile Platforms and PBX operations and capital gain from divestment of Symbian shares SEK 0.8 b. in fourth quarter 2008

 

SEGMENT SALES BY QUARTER,

2008 AND 2009 (SEK B)

 

LOGO

  

NETWORKS

 

Networks’ sales in the quarter declined by -16% year-over-year. Full year sales declined by -3%. The mobile infrastructure market share was maintained well in 2009. During the second half of 2009, Networks’ sales were impacted by reduced operator spending in a number of markets. Currency exchange rate effects had a positive impact on sales for the full year due to a strong USD in the beginning of 2009. Compared to the all-time-high GSM volumes in 2008, volumes decreased and are not yet offset by increased sales of WCDMA and initial rollouts of LTE. The IP-router business developed well during the year and the common core part of the recent LTE win with TeliaSonera is based on Ericsson’s SmartEdge IP platform.

 

Mobile voice and data traffic continues to grow and will in the longer-term require operator investments in capacity and next-generation IP networks. Current operator investment activity varies between regions and countries. During the year, operators in a number of developing markets, especially in Central Europe, Middle East and Africa, have become increasingly cautious with investments. Meanwhile, operators in China, India and the US have continued to invest.

 

As of November 13, the former Nortel CDMA and LTE business are consolidated. The vast majority of the sales are related to Networks and only a small proportion to Professional Services. In the quarter, the Nortel business added a total of SEK 2.7 b. of sales with an operating margin well above Networks’ average driven by year-end seasonality.

 

Ericsson Fourth Quarter Report 2009    5


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   EBITDA-margin in the quarter was flat year-over-year at 17% (17%) despite lower sales, positively impacted by ongoing cost reduction activities. The full year margin was 15% (16%).
  

PROFESSIONAL SERVICES

 

Professional Services sales in the quarter were flat year-over-year. Organic growth in local currencies amounted to 2%. Managed services sales in the quarter increased by 19% year-over-year and by 22% for the full year. Sales for the second half of the year were negatively impacted by the reduced scope in a managed services agreement in Italy as well as somewhat lower volumes in project-related services. At the same time, sales in the second half were positively impacted by the contract with Sprint in the US.

 

For the full year, sales increased 15% and growth in local currencies amounted to 8%.

 

Despite 2009’s financial climate, there has been a continued demand for services, especially those targeting the operational efficiency of operators, such as managed services, consulting and systems integration.

 

EBITDA-margin for Professional Services in the quarter declined to 16% (19%), negatively impacted by start-up costs from new managed services contracts with Sprint and Zain as well as the reduced scope in a managed services agreement in Italy. This was partly offset by continued efficiency gains. The full year adjusted EBITDA-margin was stable at 17% (17%).

 

The total number of subscribers in managed networks is now 370 million, of which 50% are in high-growth markets. After the close of the quarter, Ericsson announced the acquisition of Pride Spa in Italy, a consulting and systems integration company. With the added 1,000 employees the number of services professionals now amounts to 40,000 globally.

 

MULTIMEDIA

 

Multimedia sales in the quarter for comparable units, i.e. adjusted for the divestment of the PBX and mobile platform operations, decreased year-over-year by -14% mainly due to tough comparison with a strong fourth quarter 2008 and somewhat slower sales of revenue management solutions in several emerging markets. However, TV and multimedia brokering (IPX) continued to show good development. The combined strength of the business support systems (BSS) offering and the strong services portfolio is generating increased operator interest.

 

For the full year, sales increased by 5% for comparable units. Multimedia brokering (IPX) and revenue management solutions showed good development despite a decline in the fourth quarter.

 

EBITDA-margin for comparable units, i.e. also adjusted for a capital gain from divestment of Symbian shares in the fourth quarter 2008, increased in the quarter to 20% (5%). For the full year, the margin amounted to 16% (8%), positively impacted by efficiency gains and an improved gross margin.

 

Ericsson Fourth Quarter Report 2009    6


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  SONY ERICSSON

 

     Fourth quarter     Third quarter     Full year  

EUR m.

   2009     2008     Change     2009     Change     2009     2008     Change  

Number of units shipped (m.)

   14.6      24.2      -40   14.1      3   57.1      96.6      -41

Average selling price (EUR)

   120      121      -1   114      5   119      116      3

Net sales

   1,750      2,914      -40   1,619      8   6,788      11,244      -40

Gross margin

   23   15   —        16   —        15   22   —     

Operating margin

   -10   -9   —        -12   —        -15   -1   —     

Income before taxes

   -190      -261      —        -199      —        -1,043      -83      —     

Income before taxes, excl restructuring charges

   -40      -133      —        -198      —        -878      92      —     

Net income

   -167      -187      —        -164      —        -836      -73      —     

 

  

Units shipped in the quarter were 14.6 million, a sequential increase of 3% and a decrease of -40% year-over-year. Sales in the quarter were EUR 1,750 million, a sequential increase of 8% and a decrease of -40% year-over-year. The sequential increase was driven by seasonality and sales of Satio and Aino phones.

 

Average selling price in the quarter increased sequentially by 5% due to product mix. Gross margin improved sequentially and year-over-year mainly driven by sales of new higher margin phones as well as positive impact of cost reduction activities.

 

Income before taxes for the quarter, excluding restructuring charges, was a loss of EUR -40 (-133) million. The reduced loss was due to improved gross margin and reduced operating expenses. As of December 31, 2009, Sony Ericsson had a net cash position of EUR 620 million.

 

Ericsson’s share in Sony Ericsson’s income before tax was SEK -1.0 (-1.3) b. in the quarter.

Mid 2008 a program was initiated to reduce operating expenses by EUR 880 million. Full benefit of the program is expected during second half 2010. Charges for the program are estimated to be well within the previously announced EUR 500 million.

 

ST-ERICSSON

     2009    2008

USD m.

   Full year    Q4    Q3    Q2    Feb-Mar    Proforma
Q4

Net sales

   2,524    740    728    666    391    746

Adjusted operating income 1)

   -369    -50    -77    -165    -78    -98

Operating income before taxes

   -581    -139    -121    -224    -98    -127

Net income

   -539    -125    -112    -213    -89    NA

 

1)      Operating loss adjusted for amortization of acquisition related intangibles and restructuring charges

 

 

Net sales in the quarter showed an increase of 2% sequentially with further momentum in China.

 

Adjusted operating loss in the quarter was USD -50 (-98) million. Inventory declined while net cash increased USD 13 million sequentially to USD 229 million, including a one-time payment of USD 53 million from parent companies. This payment is related to final merger transaction adjustments already planned since the inception of the company.

 

Ericsson Fourth Quarter Report 2009    7


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The USD 250 million cost synergies program defined by ST-NXP Wireless is now fully completed. The USD 230 million savings plan, announced in April is on track and due to be completed by second quarter 2010. In December ST-Ericsson announced another plan to further improve financial performance and increase its competitiveness. The plan is targeting additional annualized savings of USD 115 million.

 

ST-Ericsson is reported in US-GAAP. Ericsson’s share in ST-Ericsson’s income before tax, adjusted to IFRS, was SEK -0.4 b. in the quarter, including restructuring charges of SEK 0.2 b. Ericsson Mobile Platforms incurred a loss of SEK 0.5 b. in January 2009, which is added to the reported year-to-date result in segment ST-Ericsson.

REGIONAL OVERVIEW

 

     Fourth quarter     Third quarter     Full year  

Sales, SEK b.

   2009    2008    Change     2009    Change     2009    2008    Change  

Western Europe

   11.9    16.1    -26   10.1    18   44.6    51.6    -14

Central and Eastern Europe, Middle East and Africa

   14.0    17.6    -21   11.6    20   50.7    53.1    -4

Asia Pacific

   16.7    20.5    -18   15.3    9   65.8    63.3    4

Latin America

   5.9    7.9    -25   5.0    18   20.1    23.0    -13

North America

   9.8    4.9    101   4.4    126   25.3    17.9    41

Total

   58.3    67.0    -13   46.4    26   206.5    208.9    -1

 

REGIONAL SALES BY

QUARTER,

2008 AND 2009 (SEK B)

 

LOGO

  

Western Europe sales declined -21% year-over-year in the quarter and -6% for the full-year for comparable units, i.e. excluding mobile platforms and PBX. The second half of the year was impacted by the reduced scope of a managed services agreement in Italy. Demand for services continued to be good throughout the year, especially in the UK. During the quarter, TV4 Group in Sweden selected Ericsson to operate its nationwide playout-services. In the quarter, Ericsson was also awarded one of the largest contracts in the Nordics with Mobile Norway for a nationwide mobile broadband network and the world’s first commercial 4G/LTE network was launched in Stockholm by TeliaSonera. After the closing of the quarter, Ericsson was selected as the sole supplier of the common core and a supplier of access to TeliaSonera’s 4G/LTE network in Norway and Sweden. Ericsson was also named supplier of the world’s first 84 Mbps HSPA network to 3 Scandinavia.

 

Sales in Central and Eastern Europe, Middle East and Africa decreased in the quarter by -21% year-over-year and by -4% for the full year. This is the region most impacted by the economic climate in 2009, and the credit environment is still tight for some operators. The decline in 2G is not yet offset by 3G/WCDMA sales. The interest for managed services remained strong in the region and Ericsson was selected as supplier by Romania’s largest wireline operator Romtelecom with 400 employees and by operator du in UAE. A frame agreement for 2010 for radio access and other products and services was signed with MTN.

 

Asia Pacific sales in the quarter decreased -18% year-over-year and increased by 4% for the full year. During the year, the region showed large variations where China, India, Japan and Vietnam developed well with major rollouts, while Bangladesh, Indonesia and Pakistan were affected by the economic climate. India saw a slowdown in the fourth quarter due to the upcoming 3G licenses. In Taiwan, Ericsson will deliver HSPA and pre-paid charging to Far EasTone, covering the northern parts of the country. In Indonesia, Ericsson has been selected to expand XL Axiata’s GPRS/Data Charging Systems.

 

Ericsson Fourth Quarter Report 2009    8


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Latin American sales in the quarter decreased by -25% year-over-year, and by -13% for the full year. Also this region has been affected by the economic climate. In the second half of the year, sales were also negatively impacted by delays of licensing of new spectrum and services. This has resulted in operators holding back investments in new technologies and applications, especially in larger countries. Mobile subscriptions are however continuing to develop positively with net additions for voice and in particular for mobile broadband services.

 

North American sales in the quarter increased by 101% year-over-year. Full-year sales increased 41%. In the quarter, the acquired Nortel business added a total of SEK 2.7 b. of sales. This was the first full quarter with the Sprint services business. Professional services generated a significant proportion of the revenue in the fourth quarter. The US is now the largest market with 15% of Group sales in the quarter. Accelerating demand for mobile broadband and effects of increased smartphone usage continue to drive data traffic and continued capacity investments in HSPA and LTE networks. The acquired Nortel assets and customer base substantially increase the addressable infrastructure and services market in North America.

 

MARKET DEVELOPMENT

 

GROWTH RATES ARE BASED ON ERICSSON AND MARKET ESTIMATES

 

Telecommunications plays a central role in the daily life of practically every person on earth. It is fundamental to the global economy and increasingly important to the environment. Over the last decade, mobile became an ubiquitous communications service, enabling people from all regions and walks of life to connect at an unprecedented level. The global economic slowdown is affecting all parts of the society. However, we believe that the fundamentals for longer-term positive development for the industry remain solid. Ericsson is well positioned to drive and benefit from this development.

 

Growth continues, with almost three billion new mobile subscriptions expected through 2014. These will, however, mainly come from low-usage customers in developing areas or from volume type users with multiple subscriptions. In parallel, mobile broadband is fast becoming the main growth driver for operators and equipment suppliers globally. Operators are increasingly focusing on network speed, with HSPA deployed in 130 countries today.

 

There are signs of a shift in focus in the telecom industry from connecting places and people to connecting devices and applications. In developed countries, data growth and resulting data capacity expansions are being stimulated by mobile broadband adoption and devices like smartphones, netbooks and laptops. In developing countries we are still seeing continued subscriber growth.

 

There is continued growth in mobile subscriptions, although the current growth rate is lower than in 2008. Mobile subscriptions grew by 163 million in the quarter to a total of 4.6 billion. In India alone, subscriptions grew by some 15 million per month during the fourth quarter. The global number of new WCDMA subscriptions is accelerating and grew by 38 million in the quarter to a total of 452 million, of which 185 million are estimated to be HSPA. In the third quarter, fixed broadband connections grew to 438 million, adding 15 million subscribers.

 

Voice traffic continues to be the main revenue source for operators even though data represents an increasing share. For many large operators, mobile data revenues constitute 25% of total service revenues or more. In addition to capacity enhancements, operators face the challenge of converting to all-IP broadband networks. This will include increased deployments of broadband access, routing and transmission equipment along with next-generation service delivery and revenue management systems.

 

There is continued good growth in professional services, fueled by operators’ desire to reduce operating expenses and improve efficiency in network operation and maintenance. The move toward all-IP and increased network complexity will create further demand for systems integration and consulting.

 

Ericsson Fourth Quarter Report 2009    9


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PARENT COMPANY INFORMATION

 

Net sales for the year amounted to SEK 0.3 (5.1) billion and income after financial items was SEK 8.1 (19.4) billion. Effective January 1, 2009, the right to all license revenues from third parties related to patent licenses was transferred to Ericsson AB, a wholly owned subsidiary, and consequently net sales in 2009 were insignificant compared to 2008.

 

Major changes in the Parent Company’s financial position for the year include investments in the joint venture ST-Ericsson of SEK 8.6 billion, decreased current and non-current receivables from subsidiaries of SEK 10.1 billion, decreased other current receivables of SEK 2.0 billion, increased cash, cash equivalents and short-term investments of SEK 3.2 billion, increased current and non-current liabilities to subsidiaries of SEK 5.0 billion and decreased other current liabilities of SEK 7.4 billion.

 

At year end, cash, cash equivalents and short-term investments amounted to SEK 62.4 (59.2) billion.

 

As per December 31, 2009, guarantees to Sony Ericsson amount to SEK 0.8 b. and are reported as Contingent Liabilities.

 

In accordance with the conditions of the long-term variable remuneration program (LTV) for Ericsson employees, 3,237,304 shares from treasury stock were sold or distributed to employees during the fourth quarter and 9,087,564 shares during the year. In the second quarter 27,000,000 treasury shares were repurchased. The holding of treasury stock at December 31, 2009, was 78,978,533 Class B shares.

 

DIVIDEND PROPOSAL

 

The Board of Directors will propose to the Annual General Meeting a dividend of SEK 2.00 (1.85) per share, representing some SEK 6.4 (6.0) b., and April 16, 2010, as record day for payment of dividend.

 

ANNUAL REPORT

 

The annual report will be made available to shareholders on our website www.ericsson.com and at the Ericsson headquarters, Torshamnsgatan 23, Stockholm, approximately two weeks prior to the Annual General Meeting.

 

ANNUAL GENERAL MEETING OF SHAREHOLDERS

 

The Annual General Meeting of shareholders will be held on April 13, 15.00 (CET) at Kistamässan, Stockholm.

OTHER INFORMATION

ERICSSON TO ACQUIRE MAJORITY OF NORTEL’S GSM BUSINESS

On November 25, 2009, Ericsson was selected to acquire certain assets of the Carrier Networks division relating to Nortel’s GSM business in the US and Canada. The purchase is an asset transaction at the cash purchase price of USD 70 million on a cash and debt free basis. Ericsson’s bid was made together with Kapsch CarrierCom AG of Austria that will acquire the remaining assets outside North America at a price of USD 33 million.

The operations generated approximately USD 400 million of sales in 2008 and have approximately 350 employees.

Consummation of the transaction is subject to approval of US and Canadian bankruptcy courts and the satisfaction of regulatory and other conditions.

ERICSSON TO ACQUIRE PRIDE SPA

On January 12, 2010, Ericsson announced that it has agreed to acquire Pride Spa in Italy, a consulting and systems integration company. With the added 1,000 employees the number of services professionals now amounts to 40,000 globally. Closing is expected by February 1, 2010.

 

Ericsson Fourth Quarter Report 2009    10


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APPOINTMENTS

Jan Frykhammar has been appointed CFO and Executive Vice President.

Magnus Mandersson has been appointed head of business unit Global Services and is also a member of the Group Management Team.

Rima Qureshi has been appointed head of business unit CDMA Mobile Systems and member of the Group Management Team. She is also head of Ericsson Response.

Gary Pinkham, presently head of Global Investor and Analyst Relations, has been appointed head of Corporate Affairs and Communications in North America.

Cesare Avenia, presently head of market unit South East Europe, has been appointed Chief Brand Officer and member of the Group Management Team.

Håkan Eriksson, CTO and member of the Group Management Team, has, in addition to his present responsibilities, been appointed head of Ericsson in Silicon Valley.

Johan Wibergh, head of business unit Networks and member of the Group Management Team, has been appointed Executive Vice President.

 

Ericsson Fourth Quarter Report 2009    11


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ASSESSMENT OF RISK ENVIRONMENT

Ericsson’s operational and financial risk factors and uncertainties are described under “Risk factors Assessment of risk environment” in our Annual Report 2008.

Risk factors and uncertainties in focus during the forthcoming six-month period for the Parent Company and the Ericsson Group include:

 

   

potential negative effects of the continued uncertainty in the financial markets and the weak economic business environment on operators’ willingness to invest in network development as well as uncertainty regarding the financial stability of suppliers, for example due to lack of borrowing facilities, or reduced consumer telecom spending, or increased pressure on us to provide financing;

 

   

effects on gross margins and/or working capital of the product mix in the Networks segment between sales of software, upgrades and extensions and the pro-portion of new network build-outs and break-in contracts;

 

   

a volatile sales pattern in the Multimedia segment or variability in our overall sales seasonality could make it more difficult to forecast future sales;

 

   

results and capital needs of our two major joint ventures, Sony Ericsson and ST-Ericsson, which both are negatively affected to a larger extent than our three other segments by the current economic slowdown;

 

   

effects of the ongoing industry consolidation among our customers as well as between our largest competitors, e.g. intensified price competition;

 

   

changes in foreign exchange rates, in particular USD and EUR;

 

   

continued political unrest or instability in certain markets.

Ericsson conducts business in certain countries which are subject to trade restrictions or which are focused on by certain investors. We stringently follow all relevant regulations and trade embargos applicable to us in our dealings with customers operating in such countries. Moreover, Ericsson operates globally in accordance with Group level policies and directives for business ethics and conduct. In no way should our business activities in these countries be construed as supporting a particular political agenda or regime. We have activities in such countries mainly due to that certain customers with multi-country operations put demands on us to support them in all of their markets.

Please refer further to Ericsson’s Annual Report 2008, where we describe our risks and uncertainties along with our strategies and tactics to mitigate the risk exposures or limit unfavorable outcomes.

Stockholm, January 25, 2010

Hans Vestberg, President and CEO

Telefonaktiebolaget LM Ericsson (publ)

Date for next report: April 23, 2010

 

Ericsson Fourth Quarter Report 2009    12


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AUDITORS’ REVIEW REPORT

We have reviewed this report for the period January 1 to December 31, 2009, for Telefonaktiebolaget LM Ericsson (publ). The board of directors and the CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

We conducted our review in accordance with the Standard on Review Engagements SÖG 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity, issued by FAR SRS. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing in Sweden, RS, and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act regarding the Group and with the Swedish Annual Accounts Act regarding the Parent Company.

Stockholm, January 25, 2010

PricewaterhouseCoopers AB

Peter Clemedtson

Authorized Public Accountant

EDITOR’S NOTE

To read the complete report with tables, please go to: www.ericsson.com/investors/financial_reports/2009/12month09-en.pdf

Ericsson invites media, investors and analysts to a press conference at the Ericsson headquarters, Torshamnsgatan 23, Stockholm, at 09.00 (CET), January 25.

An analysts, investors and media conference call will begin at 14.00 (CET).

Live webcasts of the press conference and conference call as well as supporting slides will be available at www.ericsson.com/press and www.ericsson.com/investors.

 

Ericsson Fourth Quarter Report 2009    13


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FOR FURTHER INFORMATION, PLEASE CONTACT

Henry Sténson, Senior Vice President, Communications

Phone: +46 10 719 4044

E-mail: investor.relations@ericsson.com or press.relations@ericsson.com

 

Investors    Media

Gary Pinkham, Vice President,

   Åse Lindskog, Vice President,

Investor Relations

   Head of Public and Media Relations

Phone: +46 10 719 0000

   Phone: +46 10 719 9725, +46 730 244 872

E-mail: investor.relations@ericsson.com

   E-mail: media.relations@ericsson.com

Susanne Andersson,

   Ola Rembe,

Investor Relations

   Public and Media Relations

Phone: +46 10 719 4631

   Phone: +46 10 719 9727, +46 730 244 873

E-mail: investor.relations@ericsson.com

   E-mail: media.relations@ericsson.com

Lars Jacobsson,

  

Investor Relations

  

Phone: +46 10 719 9489

  

E-mail: investor.relations@ericsson.com

  
Telefonaktiebolaget LM Ericsson (publ)   

Org. number: 556016-0680

  

Torshamnsgatan 23

  

SE-164 83 Stockholm

  

Phone: +46 10 719 0000

www.ericsson.com

  

 

Ericsson Fourth Quarter Report 2009    14


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DISCLOSURE PURSUANT TO THE SWEDISH SECURITIES MARKETS ACT

Ericsson discloses the information provided herein pursuant to the Securities Markets Act. The information was submitted for publication at 07.30 CET, on January 25, 2010.

Safe Harbor Statement of Ericsson under the US Private Securities Litigation Reform Act of 1995;

All statements made or incorporated by reference in this release, other than statements or characterizations of historical facts, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by us. Forward-looking statements can often be identified by words such as “anticipates”, “expects”, “intends”, “plans”, “predicts”, “believes”, “seeks”, “estimates”, “may”, “will”, “should”, “would”, “potential”, “continue”, and variations or negatives of these words, and include, among others, statements regarding: (i) strategies, outlook and growth prospects; (ii) positioning to deliver future plans and to realize potential for future growth; (iii) liquidity and capital resources and expenditure, and our credit ratings; (iv) growth in demand for our products and services; (v) our joint venture activities; (vi) economic outlook and industry trends; (vii) developments of our markets; (viii) the impact of regulatory initiatives; (ix) research and development expenditures; (x) the strength of our competitors; (xi) future cost savings; (xii) plans to launch new products and services; (xiii) assessments of risks; (xiv) integration of acquired businesses; (xv) compliance with rules and regulations and (xvi) infringements of intellectual property rights of others.

In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements speak only as of the date hereof and are based upon the information available to us at this time. Such information is subject to change, and we will not necessarily inform you of such changes. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Important factors that may cause such a difference for Ericsson include, but are not limited to: (i) material adverse changes in the markets in which we operate or in global economic conditions; (ii) increased product and price competition; (iii) reductions in capital expenditure by network operators; (iv) the cost of technological innovation and increased expenditure to improve quality of service; (v) significant changes in market share for our principal products and services; (vi) foreign exchange rate or interest rate fluctuations; and (vii) the successful implementation of our business and operational initiatives.

 

Ericsson Fourth Quarter Report 2009    15


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FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION

 

      Page

Financial statements

  

Consolidated income statement and statement of comprehensive income

   17

Consolidated balance sheet

   18

Consolidated statement of cash flows

   19

Consolidated statement of changes in equity

   20

Consolidated income statement - isolated quarters

   21

Consolidated statement of cash flows - isolated quarters

   22

Parent Company income statement

   23

Parent Company balance sheet

   23
     Page

Additional information

  

Accounting policies

   24

Net sales by segment by quarter

   25

Operating income by segment by quarter

   26

Operating margin by segment by quarter

   26

EBITDA by segment by quarter

   27

EBITDA margin by segment by quarter

   27

Net sales by market area by quarter

   28

External net sales by market area by segment

   29

Top 15 markets in sales

   29

Provisions

   30

Number of employees

   30

Information on investments in assets subject to depreciation, amortization and impairment

   30

Other information

   31

Ericsson planning assumptions for year 2009

   31

Consolidated operating income, excluding restructuring charges

   32

Restructuring charges by function

   32

Restructuring charges by segment

   32

Operating income by segment, excluding restructuring charges

   33

Operating margin by segment, excluding restructuring charges

   33

EBITDA by segment, excluding restructuring charges

   33

EBITDA margin by segment, excluding restructuring charges

   33

Acquisition of Nortel Networks Corporation

   34

 

Ericsson Fourth Quarter Report, January 25, 2010    16


Table of Contents

Consolidated Income Statement

 

SEK million

   Oct - Dec     Change     Jan - Dec     Change  
   2009     2008       2009     2008    

Net sales

   58 333      67 025      -13   206 477      208 930      -1

Cost of sales

   -39 335      -44 522      -12   -136 278      -134 661      1
                                    

Gross income

   18 998      22 503      -16   70 199      74 269      -5

Gross margin %

   32,6   33,6     34,0   35,5  

Research and development expenses

   -9 306      -8 227      13   -33 055      -33 584      -2

Selling and administrative expenses

   -7 323      -8 293      -12   -26 908      -26 974      0
                                    

Operating expenses

   -16 629      -16 520      1   -59 963      -60 558      -1

Other operating income and expenses

   878      1 502      -42   3 082      2 977      4
                                    

Operating income before shares in earnings of JV and associated companies

   3 247      7 485      -57   13 318      16 688      -20

Operating margin % before shares in earnings of JV and associated companies

   5,6   11,2     6,5   8,0  

Shares in earnings of JV and associated companies

   -1 461      -1 278        -7 400      -436     
                                    

Operating income

   1 786      6 207      -71   5 918      16 252      -64

Financial income

   314      1 191        1 874      3 458     

Financial expenses

   -719      -882        -1 549      -2 484     
                                    

Income after financial items

   1 381      6 516      -79   6 243      17 226      -64

Taxes

   -656      -2 452        -2 116      -5 559     
                                    

Net income

   725      4 064      -82   4 127      11 667      -65
                                    

Net income attributable to:

            

- stockholders of the Parent Company

   314      3 885        3 672      11 273     

- minority interests

   411      179        455      394     

Other information

            

Average number of shares, basic (million) 1)

   3 194      3 185        3 190      3 183     

Earnings per share, basic (SEK) 1) 2)

   0,10      1,22        1,15      3,54     

Earnings per share, diluted (SEK) 1) 2)

   0,10      1,21        1,14      3,52     

Statement of Comprehensive Income

 

SEK million

   Oct - Dec    Jan - Dec
   2009    2008    2009    2008

Net income

   725    4 064    4 127    11 667

Actuarial gains and losses related to pensions

   -250    -2 284    -605    -4 015

Revaluation of other investments in shares and participations Fair value remeasurement reported in equity

   -1    -937    -2    -7

Cash flow hedges

           

Gains(+)/losses(-) arising during the period

   -530    -3 950    672    -5 080

Less: Reclassification adjustments for gains (-)/losses(+) included in profit or loss

   -1 299    2 268    3 850    1 192

Less: Adjustments for amounts transferred to initial carrying amount of hegded items

   232    —      -1 029    —  

Changes in cumulative translation adjustments

   2 294    5 606    -1 361    8 528

Tax on items reported directly in or transferred from equity

   525    1 150    -1 040    2 330
                   

Other comprehensive income

   971    1 853    485    2 948
                   

Total comprehensive income

   1 696    5 917    4 612    14 615
                   

Total Comprehensive Income attributable to:

           

- Stockholders of the Parent Company

   1 248    5 607    4 211    13 988

- Minority interests

   448    310    401    627

 

1)

A reverse split 1:5 was made in June 2008. Comparative figures are restated accordingly.

2)

Based on Net income attributable to stockholders of the Parent Company

 

Ericsson Fourth Quarter Report, January 25, 2010    17


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Consolidated Balance Sheet

 

SEK million

   Dec 31
2009
   Sep 30
2009
   Dec 31
2008

ASSETS

        

Non-current assets

        

Intangible assets

        

Capitalized development expenses

   2 079    1 668    2 782

Goodwill

   27 375    23 791    24 877

Intellectual property rights, brands and other intangible assets

   18 739    15 260    20 587

Property, plant and equipment

   9 606    9 468    9 995

Financial assets

        

Equity in JV and associated companies

   11 578    12 279    7 988

Other investments in shares and participations

   256    291    309

Customer financing, non-current

   830    854    846

Other financial assets, non-current

   2 577    2 567    4 917

Deferred tax assets

   14 327    13 946    14 858
              
   87 367    80 124    87 159

Current assets

        

Inventories

   22 718    26 774    27 836

Trade receivables

   66 410    62 425    75 891

Customer financing, current

   1 444    1 875    1 975

Other current receivables

   15 146    17 286    17 818

Short-term investments

   53 926    54 104    37 192

Cash and cash equivalents

   22 798    25 685    37 813
              
   182 442    188 149    198 525

Total assets

   269 809    268 273    285 684
              

EQUITY AND LIABILITIES

        

Equity

        

Stockholders’ equity

   139 870    138 378    140 823

Minority interests in equity of subsidiaries

   1 157    1 051    1 261
              
   141 027    139 429    142 084

Non-current liabilities

        

Post-employment benefits

   8 533    8 221    9 873

Provisions, non-current

   461    385    311

Deferred tax liabilities

   2 270    2 020    2 738

Borrowings, non-current

   29 996    34 513    24 939

Other non-current liabilities

   2 035    1 907    1 622
              
   43 295    47 046    39 483

Current liabilities

        

Provisions, current

   11 970    12 001    14 039

Borrowings, current

   2 124    3 152    5 542

Trade payables

   18 864    16 887    23 504

Other current liabilities

   52 529    49 758    61 032
              
   85 487    81 798    104 117

Total equity and liabilities

   269 809    268 273    285 684
              

Of which interest-bearing liabilities and post-employment benefits

   40 653    45 886    40 354

Net cash

   36 071    33 903    34 651

Assets pledged as collateral

   550    461    416

Contingent liabilities

   1 245    984    1 080

 

Ericsson Fourth Quarter Report, January 25, 2010    18


Table of Contents

Consolidated Statement of Cash Flows

 

     Oct - Dec    Jan - Dec

SEK million

   2009    2008    2009    2008

Operating activities

           

Net income

   725    4 064    4 127    11 667

Adjustments to reconcile net income to cash

           

Taxes

   1 394    1 965    -1 011    1 032

Earnings/dividends in JV and associated companies

   1 282    1 550    6 083    4 154

Depreciation, amortization and impairment losses

   3 892    2 059    12 124    8 674

Other

   -52    -379    -340    458
                   

Net income affecting cash

   7 241    9 259    20 983    25 985

Changes in operating net assets

           

Inventories

   5 303    2 768    5 207    -3 927

Customer financing, current and non-current

   472    -619    598    549

Trade receivables

   -2 814    -9 584    7 668    -11 434

Trade payables

   1 797    2 164    -3 522    4 794

Provisions and post-employment benefits

   -157    672    -2 950    3 830

Other operating assets and liabilities, net

   684    2 303    -3 508    4 203
                   
   5 285    -2 296    3 493    -1 985

Cash flow from operating activities

   12 526    6 963    24 476    24 000

Investing activities

           

Investments in property, plant and equipment

   -1 109    -1 297    -4 006    -4 133

Sales of property, plant and equipment

   296    628    534    1 373

Acquisitions/divestments of subsidiaries and other operations, net

   -8 245    1 113    -17 505    1 836

Product development

   - 662    -393    -1 443    -1 409

Other investing activities

   - 666    884    2 029    944

Short-term investments

   678    -5 216    -17 071    -7 155
                   

Cash flow from investing activities

   -9 708    -4 281    -37 462    -8 544

Cash flow before financing activities

   2 818    2 682    -12 986    15 456

Financing activities

           

Dividends paid

   -342    -38    -6 318    -8 240

Other financing activities

   -5 803    856    4 618    1 032
                   

Cash flow from financing activities

   -6 145    818    -1 700    -7 208

Effect of exchange rate changes on cash

   441    611    -328    1 255

Net change in cash

   -2 887    4 111    -15 015    9 503

Cash and cash equivalents, beginning of period

   25 685    33 702    37 813    28 310

Cash and cash equivalents, end of period

   22 798    37 813    22 798    37 813

 

Ericsson Fourth Quarter Report, January 25, 2010    19


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Consolidated Statement of Changes in Equity

 

SEK million

   Jan - Dec
2009
   Jan - Dec
2008

Opening balance

   142 084    135 052

Total comprehensive income

   4 612    14 615

Stock issue

   135    100

Sale of own shares

   -60    -12

Stock purchase and stock option plans

   658    589

Dividends paid

   -6 318    -8 240

Business combinations

   -84    -20
         

Closing balance

   141 027    142 084
         

 

Ericsson Fourth Quarter Report, January 25, 2010    20


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Consolidated Income Statement – Isolated Quarters

 

      2009     2008  

SEK million

   Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Net sales

   58 333      46 433      52 142      49 569      67 025      49 198      48 532      44 175   

Cost of sales

   -39 335      -30 455      -34 531      -31 957      -44 522      -31 577      -31 206      -27 356   
                                                

Gross income

   18 998      15 978      17 611      17 612      22 503      17 621      17 326      16 819   

Gross margin %

   32,6   34,4   33,8   35,5   33,6   35,8   35,7   38,1

Research and development expenses

   -9 306      -8 218      -8 451      -7 080      -8 227      -7 859      -8 932      -8 566   

Selling and administrative expenses

   -7 323      -5 279      -7 443      -6 863      -8 293      -6 304      -6 271      -6 106   
                                                

Operating expenses

   -16 629      -13 497      -15 894      -13 943      -16 520      -14 163      -15 203      -14 672   

Other operating income and expenses

   878      222      1 640      342      1 502      332      704      439   
                                                

Operating income before shares in earnings of JV and associated companies

   3 247      2 703      3 357      4 011      7 485      3 790      2 827      2 586   

Operating margin % before shares in earnings of JV and associated companies

   5,6   5,8   6,4   8,1   11,2   7,7   5,8   5,9

Shares in earnings of JV and associated companies

   -1 461      -1 559      -2 144      -2 236      -1 278      -131      62      911   
                                                

Operating income

   1 786      1 144      1 213      1 775      6 207      3 659      2 889      3 497   

Financial income

   314      296      4      1 260      1 191      1 099      503      665   

Financial expenses

   -719      -294      -79      -457      -882      -618      -511      -473   
                                                

Income after financial items

   1 381      1 146      1 138      2 578      6 516      4 140      2 881      3 689   

Taxes

   -656      -374      -341      -745      -2 452      -1 202      -835      -1 070   
                                                

Net income

   725      772      797      1 833      4 064      2 938      2 046      2 619   
                                                

Net income attributable to:

                

- Stockholders of the Parent Company

   314      810      831      1 717      3 885      2 842      1 901      2 645   

- Minority interests

   411      -38      -34      116      179      96      145      -26   

Other information

                

Average number of shares, basic (million) 1)

   3 194      3 190      3 188      3 187      3 185      3 184      3 183      3 181   

Earnings per share, basic (SEK) 1) 2)

   0,10      0,25      0,26      0,54      1,22      0,89      0,60      0,83   

Earnings per share, diluted (SEK) 1) 2)

   0,10      0,25      0,26      0,54      1,21      0,89      0,59      0,83   

 

1)

A reverse split 1:5 was made in June 2008. Comparative figures are restated accordingly.

2)

Based on Net income attributable to stockholders of the Parent Company.

 

Ericsson Fourth Quarter Report, January 25, 2010    21


Table of Contents

Consolidated Statement of Cash Flows – Isolated Quarters

 

SEK million

   2009    2008
   Q4    Q3    Q2    Q1    Q4    Q3    Q2    Q1

Operating activities

                       

Net income

   725    772    797    1 833    4 064    2 938    2 046    2 619

Adjustments to reconcile net income to cash

                       

Taxes

   1 394    -1 137    -640    -628    1 965    -343    -278    -311

Earnings/dividends in JV and associated companies

   1 282    1 319    1 718    1 764    1 550    909    -41    1 736

Depreciation, amortization and impairment losses

   3 892    3 268    3 112    1 852    2 059    1 872    2 529    2 214

Other

   -52    978    -643    -623    -379    1 257    169    -589
                                       

Net income affecting cash

   7 241    5 200    4 344    4 198    9 259    6 633    4 425    5 669

Changes in operating net assets

                       

Inventories

   5 303    660    1 606    -2 362    2 768    -1 878    -1 906    -2 912

Customer financing, current and non-current

   472    394    -267    -1    -619    137    371    660

Trade receivables

   -2 814    3 655    5 017    1 810    -9 584    -3 776    -356    2 282

Trade payables

   1 797    -2 096    -1 863    -1 360    2 164    1 403    1 833    -606

Provisions and post-employment benefits

   -157    -1 060    1 532    -3 265    672    1 620    967    571

Other operating assets and liabilities, net

   684    -1 076    -1 238    -1 878    2 303    -376    3 210    -934
                                       
   5 285    477    4 787    -7 056    -2 296    -2 870    4 119    -939

Cash flow from operating activities

   12 526    5 677    9 131    -2 858    6 963    3 763    8 544    4 730

Investing activities

                       

Investments in property, plant and equipment

   -1 109    -690    -1 189    -1 018    -1 297    -997    -893    -946

Sales of property, plant and equipment

   296    99    114    25    628    428    108    209

Acquisitions/divestments of subsidiaries and other operations, net

   -8 245    -750    981    -9 491    1 113    114    602    7

Product development

   -662    -245    -327    -209    -393    -261    -422    -333

Other investing activities

   -666    3 226    886    -1 417    884    -156    12    204

Short-term investments

   678    -17 847    522    -424    -5 216    -4 606    -1 392    4 059
                                       

Cash flow from investing activities

   -9 708    -16 207    987    -12 534    -4 281    -5 478    -1 985    3 200

Cash flow before financing activities

   2 818    -10 530    10 118    -15 392    2 682    -1 715    6 559    7 930

Financing activities

                       

Dividends paid

   -342    -20    -5 956    —      -38    -188    -8 008    -6

Other financing activities

   -5 803    535    8 012    1 874    856    4 783    -3 581    -1 026
                                       

Cash flow from financing activities

   -6 145    515    2 056    1 874    818    4 595    -11 589    -1 032

Effect of exchange rate changes on cash

   441    -1 263    441    53    611    127    308    209

Net change in cash

   -2 887    -11 278    12 615    -13 465    4 111    3 007    -4 722    7 107

Cash and cash equivalents, beginning of period

   25 685    36 963    24 348    37 813    33 702    30 695    35 417    28 310

Cash and cash equivalents, end of period

   22 798    25 685    36 963    24 348    37 813    33 702    30 695    35 417

 

Ericsson Fourth Quarter Report, January 25, 2010    22


Table of Contents

Parent Company Income Statement

 

SEK million

   Oct - Dec    Jan - Dec
   2009    2008    2009    2008

Net sales

   9    1 007    300    5 086

Cost of sales

   -20    -58    -21    -669
                   

Gross income

   -11    949    279    4 417

Operating expenses

   -801    -676    -3 137    -2 384

Other operating income and expenses

   766    1 098    2 977    3 065
                   

Operating income

   -46    1 371    119    5 098

Financial net

   2 286    517    7 962    14 340
                   

Income after financial items

   2 240    1 888    8 081    19 438

Transfers to (-) / from untaxed reserves

   902    -478    902    -478

Taxes

   -341    -442    -804    -1 733
                   

Net income

   2 801    968    8 179    17 227
                   

Parent Company Balance Sheet

 

SEK million

   Dec 31
2009
   Dec 31
2008

ASSETS

     

Fixed assets

     

Intangible assets

   2 219    2 604

Tangible assets

   527    695

Financial assets

   101 344    98 837
         
   104 090    102 136

Current assets

     

Inventories

   61    80

Receivables

   23 704    31 124

Cash, bank and short-term investments

   62 403    59 214
         
   86 168    90 418

Total assets

   190 258    192 554
         

STOCKHOLDERS’ EQUITY, PROVISIONS AND LIABILITIES

     

Equity

     

Restricted equity

   47 859    47 724

Non-restricted equity

   41 953    41 954
         
   89 812    89 678

Untaxed reserves

   915    1 817

Provisions

   1 069    1 059

Non-current liabilities

   57 011    50 994

Current liabilities

   41 451    49 006

Total stockholders’ equity, provisions and liabilities

   190 258    192 554
         

Assets pledged as collateral

   550    414

Contingent liabilities

   13 072    13 029

 

Ericsson Fourth Quarter Report, January 25, 2010    23


Table of Contents

Accounting Policies

The Group

This interim report is prepared in accordance with IAS 34. The term “IFRS” used in this document refers to the application of IAS and IFRS as well as interpretations of these standards as issued by IASB’s Standards Interpretation Committee (SIC) and International Financial Reporting Interpretations Committee (IFRIC). The accounting policies adopted are consistent with those of the annual report for the year ended December 31, 2008, and should be read in conjunction with that annual report.

As from January 1, 2009, the Company has applied the following new or amended IFRS:

 

   

IAS 1 (Revised), “Presentation of Financial Statements”. The revised standard requires all non-owner changes in equity to be shown in a performance statement. The Company therefore presents two statements, the Income Statement and a Statement of Comprehensive Income.

Also, to improve the understanding of the Company’s financial performance, a new subtotal line has been added in the Income Statement, “Operating income before share in earnings of JV and associated companies”. This is to distinguish between operating income from operations consolidated and from shares in earnings of JV and associated companies accounted for using the equity method. In the interim report text, this line item is for simplicity referred to as “Operating income before joint ventures”.

 

   

IFRS 8 “Operating Segments”. This standard replaces IAS 14 “Segment Reporting” and requires a “management approach”, under which segment information is presented on the same basis as that used for internal reporting to the Chief Operating Decision Maker (CODM). In Ericsson, the Group Management Team is defined as the CODM function. The new standard has not resulted in any changes of the reportable segments.

The new joint venture, ST-Ericsson, established in February 2009, is presented as a new reportable segment. Segment Phones has been renamed to Sony Ericsson. No other changes have been made in relation to this reported segment.

None of the following new or amended standards and interpretations has had any significant impact on the financial result or position of the Company:

 

   

IFRS 2 (Amendment), “Share-Based Payments”. The amended standard deals with vesting conditions and cancellations.

 

   

Revised IAS 23, “Borrowing Costs” and “Improvements to IFRSs”, (May 2008), in relation to IAS 23.

 

   

IAS 32 and IAS 1 (Amendments), “Puttable Financial Instruments” and “Obligations Arising on Liquidation”.

 

   

“Improvements to IFRSs”, published in May 2008. These are improvements to twentytwo already effective IFRSs.

 

   

IFRIC 13, “Customer Loyalty Programmes”

 

   

IFRIC 16, “Hedges of a Net Investment of A Foreign Operation”

 

   

IFRIC 15, “Agreements for Construction of Real Estate”

 

   

IAS 39 (Amendment), “Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures”

 

   

IAS 39 (Amendment), “Recognition and measurement: Eligible Hedged Items”

 

   

IFRS 7 (Amendment), “Improving Disclosures about Financial Instruments”

 

   

IFRIC 9 and IAS 39 (Amendment) “Embedded Derivatives”

 

   

IFRIC 18, “Transfers of Assets from Customers”

Company amendment of key ratio “Inventory turnover“

Prior to 2009, this key ratio disclosed the number of times the inventory was turned over per year.

As from January 1, 2009, the inventory turnover key ratio has been amended by the Company to disclose the number of turnover days of inventory.

 

Ericsson Fourth Quarter Report, January 25, 2010    24


Table of Contents

Net Sales by Segment by Quarter

Since the segments Sony Ericsson and ST-Ericsson are reported in accordance with the equity method, their sales are not included below. Net sales related to these segments are disclosed under SEGMENT RESULTS. Net sales related to other segments are set out below.

 

     2009     2008  

Isolated quarters, SEK million

   Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Networks

   38 514      30 302      34 737      33 529      45 767      33 017      33 274      29 992   

Of which Network rollout

   6 671      5 798      5 942      4 687      7 555      4 679      4 776      4 520   

Professional Services

   16 467      12 780      14 077      12 799      16 199      11 750      11 018      10 011   

Of which Managed services

   5 098      3 570      4 587      4 178      4 270      3 458      3 416      3 112   

Multimedia

   3 352      3 351      3 328      3 241      5 059      4 431      4 240      4 172   

Of which PBX and Mobile Platforms

   —        —        —        —        1 147      951      1 532      1 586   

Multimedia excluding PBX and Mobile Platforms

   3 352      3 351      3 328      3 241      3 912      3 480      2 708      2 586   
                                                

Total

   58 333      46 433      52 142      49 569      67 025      49 198      48 532      44 175   
                                                
     2009     2008  

Sequential change, percent

   Q4     Q3     Q2     Q11)     Q4     Q3     Q2     Q1  

Networks

   27   -13   4   -27   39   -1   11   -20

Of which Network rollout

   15   -2   27   -38   61   -2   6   -30

Professional Services

   29   -9   10   -21   38   7   10   -17

Of which Managed services

   43   -22   10   -2   23   1   10   -6

Multimedia

   0   1   3   -36   14   5   2   -14

Of which PBX and Mobile Platforms

   —        —        —        —        21   -38   -3   —     

Multimedia excluding PBX and Mobile Platforms

   0   1   3   -17   12   29   5   —     
                                                

Total

   26   -11   5   -26   36   1   10   -19
                                                
     2009     2008  

Year over year change, percent

   Q4     Q3     Q2     Q11)     Q4     Q3     Q2     Q1  

Networks

   -16   -8   4   12   22   16   -1   2

Of which Network rollout

   -12   24   24   4   17   17   11   20

Professional Services

   2   9   28   28   34   7   7   5

Of which Managed services

   19   3   34   34   29   3   17   20

Multimedia

   -34   -24   -22   -22   4   10   16   24

Of which PBX and Mobile Platforms

   —        —        —        —        —        —        —        —     

Multimedia excluding PBX and Mobile Platforms

   -14   -4   23   25   —        —        —        —     
                                                

Total

   -13   -6   7   12   23   13   2   5
                                                
     2009     2008  

Year to date, SEK million

   Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar     Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar  

Networks

   137 082      98 568      68 266      33 529      142 050      96 283      63 266      29 992   

Of which Network rollout

   23 098      16 427      10 629      4 687      21 530      13 975      9 296      4 520   

Professional Services

   56 123      39 656      26 876      12 799      48 978      32 779      21 029      10 011   

Of which Managed services

   17 433      12 335      8 765      4 178      14 256      9 986      6 528      3 112   

Multimedia

   13 272      9 920      6 569      3 241      17 902      12 843      8 412      4 172   

Of which PBX and Mobile Platforms

   —        —        —        —        5 216      4 069      3 118      1 586   

Multimedia excluding PBX and Mobile Platforms

   13 272      9 920      6 569      3 241      12 686      8 774      5 294      2 586   
                                                

Total

   206 477      148 144      101 711      49 569      208 930      141 905      92 707      44 175   
                                                
Year to date,    2009     2008  

year over year change, percent

   Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar     Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar  

Networks

   -3   2   8   12   10   5   0   2

Of which Network rollout

   7   18   14   4   16   16   15   20

Professional Services

   15   21   28   28   14   7   6   5

Of which Managed services

   22   24   34   34   17   13   19   20

Multimedia

   -26   -23   -22   -22   13   16   20   24

Of which PBX and Mobile Platforms

   —        —        —        —        —        —        —        —     

Multimedia excluding PBX and Mobile Platforms

   5   13   24   25   —        —        —        —     
                                                

Total

   -1   4   10   12   11   6   3   5
                                                

 

Ericsson Fourth Quarter Report, January 25, 2010    25


Table of Contents

Operating Income by Segment by Quarter

 

     2009    2008

Isolated quarters, SEK million

   Q4    Q3    Q2    Q1    Q4    Q3    Q2    Q1

Networks

   1 857    936    1 248    2 838    4 943    2 454    1 803    1 945

Professional Services

   1 347    1 628    2 266    1 749    2 226    1 509    1 337    1 274

Multimedia

   263    330    18    44    554    9    -172    -509

Multimedia excluding PBX and Mobile Platforms

   —      —      —      —      679    179    -161    -251

Unallocated 1)

   -287    -168    -323    -77    -236    -171    -103    -108
                                       

Subtotal Segments excluding Sony Ericsson and ST-Ericsson

   3 180    2 726    3 209    4 554    7 487    3 801    2 865    2 602

Sony Ericsson

   -1 044    -1 036    -1 543    -2 070    -1 280    -142    24    895

ST-Ericsson 2)

   -351    -546    -453    -709    —      —      —      —  
                                       

Subtotal Sony Ericsson and ST-Ericsson

   -1395    -1 582    -1 996    -2 779    -1 280    -142    24    895
                                       

Total

   1785    1 144    1 213    1 775    6 207    3 659    2 889    3 497
                                       
     2009    2008

Year to date, SEK million

   Jan-Dec    Jan-Sep    Jan-Jun    Jan-Mar    Jan-Dec    Jan-Sep    Jan-Jun    Jan-Mar

Networks

   6 879    5 022    4 086    2 838    11 145    6 202    3 748    1 945

Professional Services

   6 990    5 643    4 015    1 749    6 346    4 120    2 611    1 274

Multimedia

   655    392    62    44    -118    -672    -681    -509

Multimedia excluding PBX and Mobile Platforms

   —      —      —      —      446    -233    -412    -251

Unallocated 1)

   -855    -568    -400    -77    -618    -382    -211    -108
                                       

Subtotal Segments excluding Sony Ericsson and ST- Ericsson

   13 669    10 489    7 763    4 554    16 755    9 268    5 467    2 602

Sony Ericsson

   -5 693    -4 649    -3 613    -2 070    -503    777    919    895

ST-Ericsson 2)

   -2 059    -1 708    -1 162    -709    —      —      —      —  
                                       

Subtotal Sony Ericsson and ST-Ericsson

   -7 752    -6 357    -4 775    -2 779    -503    777    919    895
                                       

Total

   5 917    4 132    2 988    1 775    16 252    10 045    6 386    3 497
                                       

 

1)

“Unallocated” consists mainly of costs for corporate staffs, non-operational capital gains and losses.

2)

First quarter 2009 includes a loss of SEK 0.5 b for January for Ericsson Mobile Platforms operations which as from February 1, 2009, are reported in ST-Ericsson. Second quarter 2009 includes a capital gain of SEK 0.1 b related to Ericsson Mobile Platforms. Fourth quarter 2009 includes a gain of SEK 0.1 b related to Ericsson Mobile Platforms.

Operating Margin by Segment by Quarter

 

As percentage of net sales,

isolated quarters

   2009     2008  
   Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Networks

   5   3   4   8   11   7   5   7

Professional Services

   8   13   16   14   14   13   12   13

Multimedia

   8   10   1   1   11   0   -4   -12

Multimedia excluding PBX and Mobile Platforms

   —        —        —        —        17   5   -6   -10
                                                

Subtotal excluding Sony Ericsson and ST-Ericsson

   5   6   6   9   11   8   6   6
                                                

As percentage of net sales,

Year to date

   2009     2008  
   Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar     Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar  

Networks

   5   5   6   8   8   6   6   7

Professional Services

   12   14   15   14   13   13   12   13

Multimedia

   5   4   1   1   -1   -5   -8   -12

Multimedia excluding PBX and Mobile Platforms

   —        —        —        —        4   -3   -8   -10
                                                

Subtotal excluding Sony Ericsson and ST-Ericsson

   7   7   8   9   8   7   6   6
                                                

 

Ericsson Fourth Quarter Report, January 25, 2010    26


Table of Contents

EBITDA by Segment by Quarter

 

     2009    2008

Isolated quarters, SEK million

   Q4    Q3    Q2    Q1    Q4    Q3    Q21)    Q1

Networks

   4 945    3 610    3 909    4 153    6 417    3 628    3 510    3 690

Professional Services

   1 815    1 926    2 464    1 977    2 365    1 811    1 589    1 480

Multimedia

   599    619    273    306    1 001    403    400    -246

Multimedia excluding PBX & Mobile Platforms

   —      —      —      —      963    425    80    14

Unallocated 2)

   -287    -168    -323    -77    -236    -171    -103    -108
                                       

Subtotal Segments excluding Sony Ericsson and ST-Ericsson

   7 072    5 987    6 323    6 359    9 547    5 671    5 396    4 816

Sony Ericsson

   -1 044    -1 036    -1 543    -2 070    -1 280    -142    24    895

ST-Ericsson 3)

   -351    -540    -453    -663    —      —      —      —  
                                       

Subtotal Sony Ericsson and ST-Ericsson

   -1 395    -1 576    -1 996    -2 733    -1 280    -142    24    895
                                       

Total

   5 677    4 411    4 327    3 626    8 267    5 529    5 420    5 711
                                       
     2009    2008

Year to date, SEK million

   Jan-Dec    Jan-Sep    Jan-Jun    Jan-Mar    Jan-Dec1)    Jan-Sep1)    Jan-Jun1)    Jan-Mar

Networks

   16 617    11 672    8 062    4 153    17 245    10 828    7 200    3 690

Professional Services

   8 182    6 367    4 441    1 977    7 245    4 880    3 069    1 480

Multimedia

   1 797    1 198    579    306    1 558    557    154    -246

Multimedia excluding PBX & Mobile Platforms

   —      —      —      —      1 482    519    94    14

Unallocated 2)

   -855    -568    -400    -77    -618    -382    -211    -108
                                       

Subtotal Segments excluding Sony Ericsson and ST-Ericsson

   25 741    18 669    12 682    6 359    25 430    15 883    10 212    4 816

Sony Ericsson

   -5 693    -4 649    -3 613    -2 070    -503    777    919    895

ST-Ericsson 3)

   -2 007    -1 656    -1 116    -663    —      —      —      —  
                                       

Subtotal Sony Ericsson and ST-Ericsson

   -7 700    -6 305    -4 729    -2 733    -503    777    919    895
                                       

Total

   18 041    12 364    7 953    3 626    24 927    16 660    11 131    5 711
                                       

 

1)

Second quarter 2008 for Multimedia was affected by SEK 156 m due to changed allocation of capitalized development expenses.

2)

“Unallocated” consists mainly of costs for corporate staffs, non-operational capital gains and losses.

3)

First quarter 2009 includes a loss of SEK 0.5 b for January for Ericsson Mobile Platforms operations which as from February 1, 2009, are reported in ST-Ericsson. Second quarter 2009 includes a capital gain of SEK 0.1 b related to Ericsson Mobile Platforms. Fourth quarter 2009 includes a gain of SEK 0.1 b related to Ericsson Mobile Platforms.

EBITDA Margin by Segment by Quarter

 

As percentage of net sales,

isolated quarters

   2009     2008  
   Q4     Q3     Q2     Q1     Q4     Q3     Q21)     Q1  

Networks

   13   12   11   12   14   11   11   12

Professional Services

   11   15   18   15   15   15   14   15

Multimedia

   18   18   8   9   20   9   9   -6

Multimedia excluding PBX & Mobile Platforms

   —        —        —        —        25   12   3   1
                                                

Subtotal excluding Sony Ericsson and ST-Ericsson

   12   13   12   13   14   12   11   11
                                                

As percentage of net sales,

Year to date

   2009     2008  
   Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar     Jan-Dec1)     Jan-Sep1)     Jan-Jun1)     Jan-Mar  

Networks

   12   12   12   12   12   11   11   12

Professional Services

   15   16   17   15   15   15   15   15

Multimedia

   14   12   9   9   9   4   2   -6

Multimedia excluding PBX & Mobile Platforms

   —        —        —        —        12   6   2   1
                                                

Subtotal excluding Sony Ericsson and ST-Ericsson

   12   13   12   13   12   11   11   11
                                                

 

1)

Second quarter 2008 for Multimedia was affected by SEK 156 m due to changed allocation of capitalized development expenses.

 

Ericsson Fourth Quarter Report, January 25, 2010    27


Table of Contents

Net Sales by Market Area by Quarter

 

     2009     2008  

Isolated quarters, SEK million

   Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Western Europe 1)

   11 901      10 110      11 365      11 203      16 135      11 629      12 125      11 681   

Central & Eastern Europe, Middle East & Africa

   13 972      11 621      12 647      12 485      17 635      13 069      11 253      11 123   

Asia Pacific

   16 738      15 354      17 396      16 282      20 500      14 114      15 785      12 908   

Latin America

   5 877      4 994      4 801      4 381      7 855      6 083      4 956      4 154   

North America

   9 845      4 354      5 933      5 218      4 900      4 303      4 413      4 309   
                                                

Total 2)

   58 333      46 433      52 142      49 569      67 025      49 198      48 532      44 175   
                                                

 

                

1)         Of which Sweden

   732      1 076      1 091      1 197      2 384      2 191      2 308      1 993   

2)         Of which EU

   13 081      11 033      12 595      12 604      18 371      13 059      13 427      12 744   
     2009     2008  

Sequential change, percent

   Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Western Europe 1)

   18   -11   1   -31   39   -4   4   -24

Central & Eastern Europe, Middle East & Africa

   20   -8   1   -29   35   16   1   -22

Asia Pacific

   9   -12   7   -21   45   -11   22   -6

Latin America

   18   4   10   -44   29   23   19   -38

North America

   126   -27   14   6   14   -2   2   0
                                                

Total 2)

   26   -11   5   -26   36   1   10   -19
                                                

 

                

1)         Of which Sweden

   -32   -1   -9   -50   9   -5   16   -19

2)         Of which EU

   19   -12   0   -31   41   -3   5   -27
     2009     2008  

Year-over-year change, percent

   Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Western Europe 1)

   -26   -13   -6   -4   5   -6   -3   -7

Central & Eastern Europe, Middle East & Africa

   -21   -11   12   12   24   9   -2   1

Asia Pacific

   -18   9   10   26   49   17   -5   5

Latin America

   -25   -18   -3   5   16   43   21   25

North America

   101   1   34   21   13   44   47   39
                                                

Total 2)

   -13   -6   7   12   23   13   2   5
                                                

 

                

1)         Of which Sweden

   -69   -51   -53   -40   -3   13   12   3

2)         Of which EU

   -29   -16   -6   -1   5   -4   -4   -8
     2009     2008  

Year to date, SEK million

   Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar     Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar  

Western Europe 1)

   44 579      32 678      22 568      11 203      51 570      35 435      23 806      11 681   

Central & Eastern Europe, Middle East & Africa

   50 725      36 753      25 132      12 485      53 080      35 445      22 376      11 123   

Asia Pacific

   65 770      49 032      33 678      16 282      63 307      42 807      28 693      12 908   

Latin America

   20 053      14 176      9 182      4 381      23 048      15 193      9 110      4 154   

North America

   25 350      15 505      11 151      5 218      17 925      13 025      8 722      4 309   
                                                

Total 2)

   206 477      148 144      101 711      49 569      208 930      141 905      92 707      44 175   
                                                

 

                

1)         Of which Sweden

   4 096      3 364      2 288      1 197      8 876      6 492      4 301      1 993   

2)         Of which EU

   49 313      36 232      25 199      12 604      57 601      39 230      26 171      12 744   
Year to date,    2009     2008  

year-over-year change, percent

   Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar     Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar  

Western Europe 1)

   -14   -8   -5   -4   -2   -5   -5   -7

Central & Eastern Europe, Middle East & Africa

   -4   4   12   12   9   3   0   1

Asia Pacific

   4   15   17   26   16   5   -1   5

Latin America

   -13   -7   1   5   25   31   23   25

North America

   41   19   28   21   34   43   43   39
                                                

Total 2)

   -1   4   10   12   11   6   3   5
                                                

 

                

1)         Of which Sweden

   -54   -48   -47   -40   6   9   8   3

2)         Of which EU

   -14   -8   -4   -1   -2   -5   -6   -8

 

Ericsson Fourth Quarter Report, January 25, 2010    28


Table of Contents

External Net Sales by Market Area by Segment

Since the segments Sony Ericsson and ST-Ericsson are reported in accordance with the equity method, their sales are not included below. Net sales related to these segments are disclosed under SEGMENT RESULTS. Net sales related to other segments are set out below.

 

Isolated quarter, SEK million

Q4 2009

   Networks     Professional
Services
    Multimedia     Total  

Western Europe

   6 644      4 653      604      11 901   

Central & Eastern Europe, Middle East & Africa

   8 758      3 898      1 316      13 972   

Asia Pacific

   12 508      3 512      718      16 738   

Latin America

   3 995      1 574      308      5 877   

North America

   6 609      2 830      406      9 845   
                        

Total

   38 514      16 467      3 352      58 333   
                        

Share of Total

   66   28   6   100

Year to date, SEK million

Jan - Dec 2009

   Networks     Professional
Services
    Multimedia     Total  

Western Europe

   23 839      18 346      2 394      44 579   

Central & Eastern Europe, Middle East & Africa

   32 700      12 942      5 083      50 725   

Asia Pacific

   50 458      12 186      3 126      65 770   

Latin America

   13 003      5 945      1 105      20 053   

North America

   17 082      6 704      1 564      25 350   
                        

Total

   137 082      56 123      13 272      206 477   
                        

Share of Total

   66   27   7   100
                        

Top 15 Markets in Sales

 

Market

   Jan - Dec
2009
    Jan - Dec
2008
    Q4
2009
    Q4
2008
 

United States

   10   7   15   6

China

   9   7   10   8

India

   7   7   6   7

Italy

   4   5   4   6

United Kingdom

   4   3   3   3

Indonesia

   4   4   3   4

Brazil

   3   4   3   4

Japan

   3   3   2   4

Spain

   3   4   3   3

Germany

   2   2   2   2

Turkey

   2   1   2   2

Nigeria

   2   2   2   3

Sweden

   2   4   1   4

Australia

   2   2   1   2

Canada

   2   2   2   1

 

Ericsson Fourth Quarter Report, January 25, 2010    29


Table of Contents

Provisions

 

     2009    2008

Isolated quarters, SEK million

   Q4    Q3    Q2    Q1    Q4    Q3    Q2    Q1

Opening balance

   12 386    13 957    12 592    14 350    12 995    11 106    10 056    9 726

Additions

   3 591    2 169    3 710    1 672    3 800