Form 6-K
Table of Contents

 

 

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

July 23, 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 July 23, 2010 regarding “Ericsson (SE)—Ericsson second quarter results.”


Table of Contents

LOGO

SECOND QUARTER REPORT

July 23, 2010

ERICSSON SECOND QUARTER RESULTS

CEO COMMENT

“Group sales in the quarter declined -8% year-over-year with lower sales in Networks. Sales in Global Services were flat due to decline in network rollout although Professional Services increased 5%,” says Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC).

“Group sales increased sequentially by 6%. Sales for comparable units, adjusted for currency exchange rate effects and hedging declined year-over-year -15%. Operators showed a continued good demand for mobile broadband driven by smartphone and laptop usage. Sales were however impacted by continued industry component shortages and supply chain bottlenecks. We estimate that this had a negative impact on our sales in the quarter by SEK 3-4 b.

Gross margin improved year-over-year and sequentially due to business mix and efficiency gains. Cash flow declined year-over-year, mainly due to increased working capital. Sony Ericsson continued to show improved results and ST-Ericsson’s transition program is on track.

Net income improved year-over-year and sequentially, positively impacted by improved earnings in Sony Ericsson.

The market conditions we saw in the second half of 2009 with mixed operator investment behavior prevailed also in the first half of this year. In the quarter all regions, except North America, showed lower year-over-year sales. Meanwhile, sequential sales showed a more mixed picture with growth in regions such as Mediterranean, North America, Northern Europe and Central Asia, as well as Sub-Saharan Africa.

Over the past years, we have gone through major changes with cost reductions and strengthened portfolio and market presence while maintaining our technology leadership. The cost reduction program, initiated in the first quarter 2009 has been completed, reaching its target. Going forward, cost and capital efficiency will remain top of our agenda,” concludes Hans Vestberg.

 

     Second quarter     First quarter     Six months  

SEK b.

   2010     2009     Change     2010     Change     2010     2009     Change  

Net sales

   48.0      52.1      -8   45.1      6   93.1      101.7      -8

Gross margin

   39   36   —        39   —        39   36   —     

EBITA margin excl JVs1)

   14   13 %3)    —        13   —        13   13 %3)    —     

Operating income excl JVs

   5.3      6.1 3)    -12   4.5      17   9.9      10.8 3)    -9

Operating margin excl JVs

   11   12 %3)    —        10   —        11   11 %3)    —     

Ericsson’s share in earnings in JVs

   -0.1      -2.0      —        -0.3      —        -0.4      -4.2      —     

Income after financial items

   5.1      4.8      4   4.1      23   9.2      8.2      12

Net income

   2.0      0.8      154   1.3      59   3.3      2.6      26

EPS diluted, SEK

   0.58      0.26      123   0.39      49   0.98      0.79      24

Adjusted cash flow2)

   -2.0      9.9      —        3.0      —        1.0      8.3      —     

Cash flow from operations

   -2.7      9.1      —        2.3      —        -0.4      6.3      —     

Restructuring charges excl JVs

   2.0      3.6      —        2.2      —        4.2      4.3      —     

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

 

1)

EBITA – Earnings before interest, tax, amortizations and write-downs of acquired intangibles.

2)

Cash flow from operations excl. restructuring cash outlays that have been provided for. Cash outlays in the quarter were SEK 0.7 (0.8) b. For the first quarter, cash outlays amounted to SEK 0.7 b.

3)

Second quarter 2009 excl. capital gain of SEK 0.8 b from divested TEMS services operation.

 

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FINANCIAL HIGHLIGHTS

Income statement and cash flow

Sales in the quarter were down -8% year-over-year and increased 6% sequentially. Sales for comparable units, adjusted for currency exchange rate effects and hedging, declined -15% year-over-year. The net impact of currency exchange rate effects and hedging was slightly negative. Sales were impacted by continued industry component shortages and supply chain bottlenecks. We estimate that this had a negative impact on our sales in the quarter by SEK 3-4 b.

During the quarter, operators in a number of developing markets were still cautious with investments which impacted sales in Networks, Network Rollout and Multimedia. This was partly offset by increased sales in Professional Services and especially in Managed Services.

Gross margin, excluding restructuring, improved slightly sequentially and improved year-over-year to 39% (36%) due to business mix and efficiency gains.

The cost reduction activities have reduced operating expenses as planned. However, integration of the acquired CDMA and GSM businesses, higher investments in certain R&D areas and growing number of 4G/LTE trials, have resulted in an increase in operating expenses to SEK 13.9 (13.6) b., excluding restructuring charges. Other operating income and expenses were SEK 0.5 (1.6) b. in the quarter. Last year includes a capital gain of SEK 0.8 b. from the divested TEMS services operation.

Operating income, excluding joint ventures and restructuring charges, amounted to SEK 5.3 (6.1) b., including positive contribution from the acquired CDMA and GSM businesses. The year-over-year decline is mainly due to lower sales. Operating margin declined to 11% (12%) for the same reason. Sequentially, the margin improved due to increased sales and efficiency gains. The capital gain of SEK 0.8 b. from the divested TEMS services operation is excluded from the 2009 numbers.

Ericsson’s share in earnings of joint ventures, before tax, amounted to SEK -0.1 (-2.0) b. excluding restructuring charges, compared to SEK -0.3 b. in the first quarter. Sequentially, Sony Ericsson improved sales and margins significantly due to efficiency programs and new products. ST-Ericsson’s sales declined sequentially, however the loss remained at the same level, positively impacted by efficiency programs. Restructuring charges in joint ventures were SEK 0.2 b. in the quarter.

Financial net was SEK -0.1 (-0.1) b., mainly due to low interest rates and negative currency revaluation effects on financial assets and liabilities.

Net income amounted to SEK 2.0 (0.8) b. and earnings per share were SEK 0.58 (0.26) in the quarter.

Adjusted cash flow was SEK -2.0 (9.9) b. in the quarter, down sequentially from SEK 3.0 b. Cash flow from operations decreased mainly due to increased working capital as a result of tight components supply conditions which led to deliveries late in the quarter.

Balance sheet and other performance indicators

 

SEK b.

   Dec 31
2009
    Mar 31
2010
    June 30
2010
 

Net cash

   36.1      38.5      25.8   

Interest-bearing liabilities and post-employment benefits

   40.7      39.3      41.8   

Trade receivables

   66.4      62.7      69.4   

Days sales outstanding

   106      117      133   

Inventory

   22.7      24.1      29.4   

Of which regional inventory

   12.9      14.0      18.3   

Inventory days

   68      75      81   

Payable days

   57      59      61   

Customer financing, net

   2.3      2.9      3.1   

Return on capital employed

   4   5   6

Equity ratio

   52   53   51

 

Ericsson Second Quarter Report 2010   2


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Trade receivables increased sequentially by SEK 6.7 b. to SEK 69.4 (62.7) b. and days sales outstanding (DSO) increased from 117 to 133 days impacted by higher proportion of deliveries late in the quarter and currency exchange effects. The consolidation of the LG-Nortel operation impacted trade receivables by SEK 1.0 b.

Inventory increased sequentially by SEK 5.3 b. to SEK 29.4 (24.1) b. and inventory turnover days increased by six days from 75 to 81 days, impacted by continued component shortages and supply chain bottlenecks. The consolidation of the LG-Nortel operation impacted inventory by SEK 1.0 b.

Cash, cash equivalents and short-term investments amounted to SEK 67.6 (77.9) b. The net cash position decreased sequentially by SEK 12.7 b. to SEK 25.8 (38.5) b., due to pay out of dividend of SEK 6.4 b., the acquisition of Nortel’s part of LG-Nortel and negative cash flow from operations as a result of increased working capital.

During the quarter, approximately SEK 1.5 b. of provisions were utilized, of which SEK 0.7 b. related to restructuring. Additions of SEK 2.4 b. were made, of which SEK 1.3 b. related to restructuring. Reversals of SEK 0.3 b. were made.

Cost reduction program

The cost reduction program, initiated in first quarter 2009, has been completed by the second quarter 2010. The total annual savings of the program are estimated to SEK 15-16 b. from the second half of 2010. Of total restructuring charges of SEK 15.5 b., about SEK 6.0 b. is related to cost of sales and SEK 9.5 b. to operating expenses.

In the second quarter, restructuring charges, excluding joint ventures, amounted to SEK 2.0 b. At the end of the quarter, cash outlays of SEK 4.7 b. remain to be made.

 

Restructuring charges, SEK b.

   2010
Q2
   2010
Q1
   2009
Full year

Cost of sales

   -1.0    -0.8    -4.2

Research and development expenses

   -0.6    -0.3    -6.1

Selling and administrative expenses

   -0.4    -1.1    -1.0
              

Total

   -2.0    -2.2    -11.3
              

 

Ericsson Second Quarter Report 2010   3


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SEGMENT RESULTS

 

     Second quarter     First quarter     Six months  

SEK b.

   2010     2009     Change     2010     Change     2010     2009     Change  

Networks sales

   25.5      28.8      -12   24.7      3   50.2      57.6      -13

EBITA margin1)

   17   14   —        16   —        16   14   —     

Operating margin

   13   12   —        12   —        13   12   —     
                                                

Global Services sales

   20.1      20.0      0   18.1      11   38.2      37.5      2

Of which Professional Services

   14.8      14.1      5   13.3      12   28.1      26.9      5

Of which Managed Services

   5.6      4.6      23   4.9      15   10.5      8.8      20

Of which Network Rollout

   5.2      5.9      -12   4.8      8   10.1      10.6      -5

EBITA margin1)

   12   12 %2)    —        12   —        12   11 %2)    —     

Of which Professional Services

   15   16 %2)    —        16   —        16   16 %2)    —     

Operating margin

   12   12 %2)    —        11   —        11   11 %2)    —     

Of which Professional Services

   15   16 %2)    —        15   —        15   15 %2)    —     
                                                

Multimedia sales

   2.4      3.3      -27   2.3      5   4.7      6.6      -28

EBITA margin1)

   -5   15   —        -5   —        -5   12   —     

Operating margin

   -13   9   —        -13   —        -13   5   —     
                                                

Total sales

   48.0      52.1      -8   45.1      6   93.1      101.7      -8
                                                

All numbers exclude restructuring charges.

 

1)

EBITA – Earnings before interest, tax, amortizations and write-downs of acquired intangibles.

2)

Second quarter 2009 excl. capital gain of SEK 0.8 b from divested TEMS services operation.

Networks

Networks’ sales in the quarter declined by -12% year-over-year. Voice related sales, such as 2G access and circuit switched core continued to decline. Increased mobile broadband sales (3G), including radio, backhaul and packet core, partly offset this impact. CDMA continued to develop favorably. Similar to the first quarter segment sales were negatively impacted by continued component shortages and supply chain bottlenecks.

The strong data traffic uptake is creating transmission bottlenecks and demand for microwave based backhaul solutions was strong in the quarter.

EBITA margin in the quarter increased year-over-year to 17% (14%) despite lower sales, positively impacted by continued efficiency gains and business mix with a high proportion of network expansions.

The multi standard radio base station RBS 6000 has been well received by customers and is now shipping in volumes. In the quarter, the world’s first commercial 42 Mbit/s HSPA network was launched with Ericsson equipment. There was continued good demand for IP infrastructure based on the SmartEdge platform. The same platform is used in Ericsson’s converged packet gateway which is part of the mobile packet core for 4G/LTE.

Global Services

Global Services sales were flat year-over-year, but increased 11% sequentially. Global services sales account for some 42% of total Group sales. Professional Services sales increased 5% year-over- year and in local currencies growth amounted to 9% year-over-year. Managed Services sales in the quarter increased by 23% year-over-year. Network Rollout sales decreased -12% year-over-year.

The year-over-year slow-down in growth in Global Services sales is primarily an effect of lower network rollout activity driven by fewer turnkey projects, continued component shortages and supply chain bottlenecks.

There is a continued good demand for services targeting the operational efficiency of operators, such as managed services, systems integration and consulting. Operators also show growing interest in network optimization services, driven by mobile broadband build out, as well as revenue assurance services. Services related to 2G voice sales developed unfavorably also this quarter.

EBITA margin for Global Services was flat year-over- year and sequentially at 12% (12%). EBITA margin for Professional Services amounted to 15% (16%) in the quarter and decreased slightly sequentially from 16%. Last year excludes a capital gain of SEK 0.8 b. from the divested TEMS operations.

During the quarter, nine managed services contracts were signed of which six were extensions or expansions of existing customer agreements. Further proof of operators’ interest in our services offering is our largest managed services contract in China to date with China Mobile Hebei announced on July 19.

Ericsson provides support for networks that serve more than two billion subscribers worldwide. The total number of subscribers in managed networks is more than 450 million, of which 50% are in high-growth markets.

 

Ericsson Second Quarter Report 2010   4


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Multimedia

Multimedia sales in the quarter decreased by -27% year-over-year due to continued weak demand for revenue management solutions in regions India, Middle East and Sub-Saharan Africa. Sales grew 5% sequentially, driven by TV and Multimedia Brokering.

The TV business continued to show good development with strong demand for compression technology. EBITA margin declined to -5% (15%) year-over-year as a result of the lower sales.

Sony Ericsson

 

     Second quarter     First quarter     Six months  

EUR m.

   2010     2009     Change     2010     Change     2010     2009     Change  

Number of units shipped (m.)

   11.0      13.8      -20   10.5      5   21.5      28.3      -24

Average selling price (EUR)

   160      122      31   134      19   147      121      21

Net sales

   1,757      1,684      4   1,405      25   3,162      3,419      -8

Gross margin

   28   12   —        31   —        29   10   —     

Operating margin

   2   -16   —        1   —        2   -19   —     

Income before taxes

   31      -283      —        18      —        50      -653      —     

Income before taxes, excl restructuring charges

   63      -283      —        21      —        84      -640      —     

Net income

   12      -213      —        21      —        33      -505      —     

Units shipped in the quarter were 11 million, a decrease of -20% year-over-year and an increase of 5% sequentially. Sales in the quarter were EUR 1,757 million, an increase of 4% year-over-year and 25% sequentially.

Average selling price in the quarter increased by 31% year-over-year due to improved product and geographical mix, as well as currency effects.

Income before taxes for the quarter, excluding restructuring charges, was a profit of EUR 63 (-283) million, illustrating the positive impact of the cost reduction program and favorable product mix. As of June 30, 2010, Sony Ericsson had a net cash position of EUR 609 million.

Ericsson’s share in Sony Ericsson’s income before tax was SEK 0.1 (-1.5) b. in the quarter.

 

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ST-Ericsson

 

     Second quarter     First quarter  

USD m.

   2010    2009    Change     2010    Change  

Net sales

   544    666    -18   606    -10

Adjusted operating income 1)

   -118    -165    —        -114    —     

Operating income before taxes

   -148    -224    —        -164    —     

Net income

   -139    -213    —        -154    —     

 

1)

Operating income adjusted for amortization of acquired intangibles and restructuring charges.

Net sales decreased by -10% sequentially, reflecting the continued portfolio transition, weaker than expected performance in Asia and some supply limitations, which were only partially offset by a positive performance by certain EDGE products.

The adjusted operating loss increased sequentially by USD 4 m. The impact of the lower level of revenues was mitigated by the positive effects of the cost savings generated in the quarter.

Net cash was USD 43 m. at the end of the quarter. During the quarter the company sold trade receivables without recourse, of which USD 67 m. were outstanding at the end of the quarter. The cash outflow was due to the operating loss and payments related to the restructuring.

The restructuring plans, respectively, of USD 230 m., announced on April 29, 2009, and of USD 115 million, announced on December 3, 2009, are on track. The USD 230 m. plan was completed with 87% of the savings realized at the end of the second quarter, and the full effects are expected to come through in the third quarter. The USD 115 m. restructuring plan is expected to start contributing savings from the third quarter of 2010.

ST-Ericsson is reported in US GAAP. Ericsson’s share in ST-Ericsson’s income before tax, adjusted to IFRS, was SEK -0.4 (-0.6) b. in the quarter, including restructuring charges of SEK -19 (-140) m.

REGIONAL OVERVIEW

 

     Second quarter     First quarter     Six months  

Sales, SEK b.

   2010    2009    Change     2010    Change     2010    2009    Change  

North America

   13.1    5.7    128   9.5    37   22.5    10.5    115

Latin America

   4.2    4.8    -12   4.0    6   8.2    9.2    -11

Northern Europe and Central Asia

   2.7    2.9    -7   2.3    16   5.0    5.8    -14

Western and Central Europe

   4.4    5.4    -19   5.2    -16   9.6    10.8    -11

Mediterranean

   5.6    6.8    -17   5.1    11   10.7    12.9    -17

Middle East

   3.8    4.7    -20   3.9    -4   7.7    8.7    -11

Sub-Saharan Africa

   3.0    3.6    -19   2.4    22   5.4    8.3    -35

India

   1.4    3.7    -63   2.3    -41   3.7    7.7    -52

China and North East Asia

   4.6    7.2    -36   5.0    -7   9.6    13.0    -26

South East Asia and Oceania

   3.6    5.7    -36   3.5    4   7.2    10.9    -34

Other

   1.6    1.6    3   1.9    -14   3.5    3.9    -10
                                           

Total

   48.0    52.1    -8   45.1    6   93.1    101.7    -8
                                           

North America sales increased 128% year-over-year and 37% sequentially. The strong mobile data growth was further spurred by the launch of smartphones by all leading carriers. This development drives capacity investments in mobile broadband networks. Operators are also working on tiered price plans. In the quarter, Ericsson started volume deliveries of 4G/LTE.

Latin America sales decreased -12% year-over-year and grew 6% sequentially. Operator consolidation is ongoing in the region. Lower cost smartphones has created continuous growth in mobile broadband usage, pushing operators for investments in networks and services. LTE trials are ongoing in the region and additional 3G licenses are still to be auctioned in Costa Rica, Brazil and Mexico.

Northern Europe and Central Asia sales decreased by -7% year-over-year and increased 16% sequentially. Sales of mobile network infrastructure increased sequentially, mainly driven by major 2G expansions and 3G build-outs in the Eastern part of the region.

 

Ericsson Second Quarter Report 2010   6


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Western and Central Europe sales decreased -19% year-over-year and -16% sequentially due to cautious operator investments in parts of the region. Development in the region showed large variations, parts of Western Europe developed favorably while Central Europe in general was slow. Mobile broadband usage is rapidly increasing in the region and operators are marketing network quality and speed as a differentiator. 4G/LTE and network modernization is high on operators’ agendas and new projects will be defined in coming quarters.

Services represented two thirds of the sales in the quarter, and operators’ focus on efficiency continued to drive a strong interest in exploring business models such as network sharing and network transformations leading to opportunities both in services and networks.

Mediterranean sales decreased -17% year-over-year and increased 11% sequentially. Operator investments in Spain and Greece were low due to overall economic environment. In order to meet demand for mobile broadband services operators continued to focus on network modernization. Operators also have operational efficiency high on the agenda which created good demand for managed services and consulting.

Middle East sales decreased -20% year-over-year and by -4% sequentially. Services sales showed a continued growth in the quarter driven by demand for managed services. Services represented 46% of the business in the region this quarter.

Sales development showed large variations across the region but in general operators were cautious with investments. Egypt and Gulf Countries developed favorably, while Turkey and Saudi Arabia were slower. Although 2G is still in operators’ focus, 3G related sales are becoming significant.

Sub-Saharan Africa sales decreased by -19% year- over-year and increased 22% sequentially. The region continued to be impacted by the global economic downturn with a tight credit environment. Operator consolidation is also taking place in the region, which temporarily reduced investments. Mobile subscriptions are developing positively with net additions for both voice and broadband services. New mobile licenses are being selected in certain countries.

India sales decreased -63% year-over-year and -41% sequentially due to cautious operator investments in the lead up to the 3G auctions as well as the ongoing government initiated security clearance process. The decline in business volumes mainly affected mobile infrastructure sales while recurring services business maintained its good development. The auctions for 3G and broadband wireless access operating at 2.3GHz took place in the quarter and deployments are expected to start in the second half of the year in a highly competitive market.

China and North East Asia sales decreased -36% year-over-year and by -7% sequentially. The year- over-year decline is related to timing of roll-out for 3G/WCDMA in mainland China. In 2009 a majority of network rollouts took place during the first half of the year. While operators on mainland China are still focused on successful 3G launches, operators across the region also now have 4G/LTE on the agenda. In Japan, demand for mobile broadband has had a positive effect on sales.

On June 30, 2010, the acquisition of Nortel’s part of LG-Nortel was completed. This positions Ericsson as a leading vendor in Korea. Another milestone was the showcase of the first complete TD-LTE solution with end-to-end capabilities together with ST-Ericsson in China.

South East Asia and Oceania sales decreased -36% year-over-year and increased 4% sequentially. Sales of network equipment were weaker overall due to cautious investment in a number of markets. Highlights include network expansions in Indonesia and Bangladesh. Access to spectrum for 3G and also 4G/LTE remains a limitation in several markets. Overall there is an increasing interest for managed services among operators in several countries.

The region includes a mix of markets focused on long- term government sponsored fiber deployments as well as operator investment in HSPA upgrades and 4G/LTE trials. Other markets in the region are continuing to expand in 2G and 3G mobile networks.

Other includes sales of for example embedded modules, cables, power modules as well as licensing and IPR.

 

Ericsson Second Quarter Report 2010   7


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MARKET DEVELOPMENT

Growth rates are based on Ericsson and market estimates

Operator investment behavior continues to vary across regions and countries. In markets with strong data traffic uptake, network quality and efficiencies are high on operators’ agendas.

Ericsson’s addressable market was estimated to USD 350 b. in 2009 of which USD 200 b. relates to the core business mobile networks, converged networks, services and multimedia. USD 150 b. relates to platforms and handsets.

While the global mobile infrastructure market declined by more than 10% in 2009 with continued decline in the first quarter 2010, measured in USD, 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.

Mobile broadband is being built-out across the world. However, HSPA still only covers 25% of the world’s population.

Ericsson findings based on measurements in live networks show that global mobile data traffic almost doubled between Q109 to Q110. Mobile data traffic is forecasted to double annually over the next five years, primarily driven by 24/7 connectivity and usage of smartphones and laptops.

Voice traffic is still the main revenue source for operators even though data represents an increasing share as more and more consumers use data traffic generating devices, such as smartphones and laptops. For many large operators, mobile data revenues constitute 25% of total service revenues or more. In Japan there are operators whose data revenues account for more than 50% of total revenues. Tiered price plans for mobile broadband are on operators agendas and in some markets such plans have already been introduced.

From having connected places and currently people, operators are now moving towards connecting things. Ericsson believes that every device that can benefit from connectivity will be connected in the future.

Ericsson envisions that by 2020 50 b. devices will be connected.

Data traffic uptake in mobile as well as fixed networks drives need for higher capacity in areas such as backhaul, aggregation, transport, routing based on IP and Ethernet technologies.

With operators’ focus on increased network quality and efficiency, the ability to deal with high data volumes while maintaining telecom grade service levels is key. This also drives demand for services targeting the operational efficiency of operators, such as managed services and consulting.

There is continued good growth in the professional services market. The move toward all-IP and increased network complexity will create further demand for systems integration and consulting.

Mobile subscriptions are estimated to have increased by 190 million in the quarter, returning to higher growth levels. China and India alone accounted for 50% of net additions with 33 and 61 million respectively. Ericsson estimates that the global mobile subscriptions hit the 5 b. mark on July 8, 2010. Global mobile penetration is now 72%. GSM/GPRS/EDGE added 125 of the 190 million net subscription additions in the quarter and will continue to be an important technology for billions of users many years to come.

The global number of new WCDMA subscriptions grew by 40 million in the quarter to a total of 530 million, of which 245 million are estimated to be HSPA. Ericsson estimates that the global mobile broadband subscriptions will amount to more than 3.4 b. by 2015.

Demand for fixed broadband maintained a 3.5% growth rate during Q110 to add 16 million subscriptions for the quarter and reached 474 million. DSL remains the prevailing technology with around 66% of total subscribers. Top 3 countries, China, US and Japan, account for almost 50% of global fixed broadband subscriptions

 

Ericsson Second Quarter Report 2010   8


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PARENT COMPANY INFORMATION

Net sales for the six-month period amounted to SEK 0.0 (0.3) b. and income after financial items was SEK 4.8 (5.2) b.

Major changes in the Parent Company’s financial position for the six-month period include; investments in LG-Ericsson of SEK 1.8 b.; decreased current and non-current receivables from subsidiaries of SEK 5.1 b.; decreased cash, cash equivalents and short-term investments of SEK 7.5 b. and decreased current and non-current liabilities to subsidiaries of SEK 10.6 b.

During the second quarter the dividend payment of SEK 6.4 b., as decided by the Annual General Meeting, has been made. As per June 30, 2010, cash, cash equivalents and short-term investments amounted to SEK 54.9 (62.4) b.

In accordance with the conditions of the long-term variable remuneration program (LTV) for Ericsson employees, 1,316,895 shares from treasury stock were sold or distributed to employees during the second quarter. The holding of treasury stock at June 30, 2010 was 76,385,435 Class B shares.

OTHER INFORMATION

Acquisition of Nortel’s stake of LG-Nortel completed

On June 30, 2010, Ericsson announced it had completed the acquisition of Nortel’s majority shareholding (50%+1 share) in LG-Nortel, the joint venture of LG Electronics and Nortel Networks. The purchase price was USD 242 million on a cash and debt free basis. The acquisition will be accretive to Ericsson’s earnings within a year.

LG-Nortel generated approximately USD 650 million of sales in 2009 and had 1,300 employees. LG-Nortel was consolidated by Ericsson as of June 30, 2010 and is included in segment Networks. The new name of the operation is LG-Ericsson.

Nomination committee appointed

On June 16, 2010 Ericsson announced that the nomination committee for the Annual General Meeting of Shareholders (AGM) 2011 had been appointed in accordance with the procedure resolved by the AGM 2010. The committee consists of Jacob Wallenberg (chairman of the nomination committee), Carl-Olof By, Caroline af Ugglas, Marianne Nilsson and Michael Treschow.

 

Ericsson Second Quarter Report 2010   9


Table of Contents

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 2009.

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

 

 

Potential negative effects on operators’ willingness to invest in network development due to a continued uncertainty in the financial markets and a weak economic business environment as well as uncertainty regarding the financial stability of suppliers, for example due to lack for 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 as well as break-in contracts;

 

 

Effects on gross margins of the product mix in the global services segment including proportion of new network build-outs and share of new managed services deals with initial transition costs;

 

 

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

 

 

Effects of the ongoing industry consolidation among our customers as well as between our largest competitors, e.g. with postponed investments and intensified price competition as a consequence;

 

 

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

 

 

Political unrest or instability in certain markets;

 

 

Effects on production and sales from restrictions with respect to timely and adequate supply of materials, components and production capacity and other vital services on competitive terms;

 

 

Natural disasters, effecting production, supply and transportation.

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 their markets.

Please refer further to Ericsson’s Annual Report 2009, where we describe our risks and uncertainties along with our strategies and tactics to mitigate risk exposures or limit unfavorable outcomes.

Stockholm, July 23, 2010

Hans Vestberg, President and CEO

Telefonaktiebolaget LM Ericsson (publ)

Date for next report: October 22, 2010

 

Ericsson Second Quarter Report 2010   10


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BOARD ASSURANCE

The Board of Directors and the CEO certify that the financial report for the first six months gives a fair view of the performance of the business, position and profit or loss of the Company and the Group, and describes the principal risks and uncertainties that the Company and the companies in the Group face.

Stockholm, July 23, 2010

Telefonaktiebolaget LM Ericsson (publ)

Org. Nr. 556016-0680

 

Sverker Martin-Löf

 

Michael Treschow

 

Marcus Wallenberg

Deputy chairman

 

Chairman

 

Deputy chairman

Roxanne S. Austin

 

Sir Peter L. Bonfield

 

Anders Nyrén

Member of the board

 

Member of the board

 

Member of the board

Börje Ekholm

 

Ulf J. Johansson

 

Nancy McKinstry

Member of the board

 

Member of the board

 

Member of the board

Carl-Henric Svanberg

   

Michelangelo Volpi

Member of the board

   

Member of the board

Anna Guldstrand

 

Jan Hedlund

 

Karin Åberg

Member of the board

 

Member of the board

 

Member of the board

Hans Vestberg

Member of the board and

President and CEO

 

Ericsson Second Quarter Report 2010   11


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AUDITORS’ REVIEW REPORT

We have reviewed this report for the period January 1 to June 30, 2010, for Telefonaktiebolaget LM Ericsson (publ). The board of directors and the CEO are responsible for the preparation and presentation of this financial information in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this financial information 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, July 23, 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/2010/6 month10-en.pdf

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

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

Video material will be published during the day on www.ericsson.com/broadcast_room

 

Ericsson Second Quarter Report 2010   12


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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 media.relations@ericsson.com

 

Investors    Media
Åse Lindskog, Vice President,    Ola Rembe, Vice President,
Head of Industry and Investor Relations    Head of Corporate Public and Media Relations
Phone: +46 10 719 9725, +46 730 244 872    Phone: +46 10 719 9727, +46 730 244 873
E-mail: investor.relations@ericsson.com    E-mail: media.relations@ericsson.com
Susanne Andersson,    Corporate Public & Media Relations
Investor Relations    Phone: +46 10 719 69 92
Phone: +46 10 719 4631    E-mail: medial.relations@ericsson.com
E-mail: investor.relations@ericsson.com   
   Telefonaktiebolaget LM Ericsson (publ)
Andreas Hedemyr,    Org. number: 556016-0680
Investor Relations    Torshamnsgatan 23
Phone: +46 10 714 3748    SE-164 83 Stockholm
E-mail: investor.relations@ericsson.com    Phone: +46 10 719 0000
   www.ericsson.com

 

Ericsson Second Quarter Report 2010   13


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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 July 23, 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 Second Quarter Report 2010   14


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FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION

 

      Page

Financial statements

  

Consolidated income statement and statement of comprehensive income

   16

Consolidated balance sheet

   17

Consolidated statement of cash flows

   18

Consolidated statement of changes in equity

   19

Consolidated income statement - isolated quarters

   20

Consolidated statement of cash flows - isolated quarters

   21

Parent Company income statement

   22

Statement on Comprehensive Income

   22

Parent Company balance sheet

   22
     Page

Additional information

  

Accounting policies

   23

Accounting policies (cont.)

   24

Net sales by segment by quarter

   25

Operating income by segment by quarter

   26

Operating margin by segment by quarter

   26

EBITA by segment by quarter

   27

EBITA margin by segment by quarter

   27

Net sales by region by quarter

   28

Net sales by region by quarter (cont.)

   29

External net sales by region by segment

   30

Top 5 countries in sales

   30

Provisions

   31

Number of employees

   31

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

   31

Other information

   32

Ericsson planning assumptions for year 2010

   32

Consolidated operating income, excluding restructuring charges

   33

Restructuring charges by function

   33

Restructuring charges by segment

   33

Operating income by segment, excluding restructuring charges

   34

Operating margin by segment, excluding restructuring charges

   34

EBITA by segment, excluding restructuring charges

   34

EBITA margin by segment, excluding restructuring charges

   34

 

Ericsson Second Quarter Report 2010   15


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Consolidated Income Statement

 

     Apr - Jun           Jan - Jun        

SEK million

   2009     2010     Change     2009     2010     Change  

Net sales

   52,142      47,972      -8   101,711      93,084      -8

Cost of sales

   -34,531      -30,235      -12   -66,488      -58,762      -12
                                    

Gross income

   17,611      17,737      1   35,223      34,322      -3

Gross margin (%)

   33.8   37.0     34.6   36.9  

Research and development expenses

   -8,451      -7,751      -8   -15,531      -15,277      -2

Selling and administrative expenses

   -7,443      -7,158      -4   -14,306      -14,166      -1
                                    

Operating expenses

   -15,894      -14,909      -6   -29,837      -29,443      -1

Other operating income and expenses

   1,640      500      -70   1,982      802      -60
                                    

Operating income before shares in earnings of JV and associated companies

   3,357      3,328      -1   7,368      5,681      -23

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

   6.4   6.9     7.2   6.1  

Shares in earnings of JV and associated companies

   -2,144      -308        -4,380      -680     
                                    

Operating income

   1,213      3,020        2,988      5,001     

Financial income

   4      470        1,264      748     

Financial expenses

   -79      -596        -536      -1,034     
                                    

Income after financial items

   1,138      2,894        3,716      4,715     

Taxes

   -341      -867        -1,086      -1,414     
                                    

Net income

   797      2,027        2,630      3,301      26
                                    

Net income attributable to:

            

- Stockholders of the Parent Company

   831      1,881        2,548      3,145     

- Minority interests

   -34      146        82      156     

Other information

            

Average number of shares, basic (million)

   3,188      3,196        3,188      3,196     

Earnings per share, basic (SEK)1)

   0.26      0.59        0.80      0.98     

Earnings per share, diluted (SEK)1)

   0.26      0.58        0.79      0.98     

Statement of Comprehensive Income

 

     Apr - Jun    Jan - Jun

SEK million

   2009    2010    2009    2010

Net income

   797    2,027    2,630    3,301

Other comprehensive income

           

Actuarial gains and losses, and the effect of the asset ceiling, related to pensions participations

   902    -242    -282    -528

Fair value remeasurement

   —      9    -1    9

Cash flow hedges

           

Gains/losses arising during the period

   1,682    -1,764    -904    -1,568

Reclassification adjustments for gains/losses included in profit or loss

   1,042    334    5,444    44

Adjustments for amounts transferred to initial carrying amount of hegded items

   —      -136    -1,261    -136

Changes in cumulative translation adjustments

   -1,593    3,772    1,867    3,157

Tax on items relating to components of OCI

   -870    476    -1,026    487
                   

Total other comprehensive income

   1,163    2,449    3,837    1,465
                   

Total comprehensive income

   1,960    4,476    6,467    4,766
                   

Total comprehensive income attributable to:

           

- Stockholders of the Parent Company

   2,054    4,232    6,380    4,491

- Minority interests

   -94    244    87    275

 

1)

Based on Net income attributable to stockholders of the Parent Company

 

Ericsson Second Quarter Report 2010, July 23, 2010    16


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Consolidated Balance Sheet

 

SEK million

   Dec 31
2009
   Mar 31
2010
   Jun 30
2010

ASSETS

        

Non-current assets

        

Intangible assets

        

Capitalized development expenses

   2,079    2,189    2,706

Goodwill

   27,375    27,638    30,003

Intellectual property rights, brands and other intangible assets

   18,739    17,107    16,801

Property, plant and equipment

   9,606    9,319    9,810

Financial assets

        

Equity in JV and associated companies

   11,578    11,286    11,596

Other investments in shares and participations

   256    240    266

Customer financing, non-current

   830    979    969

Other financial assets, non-current

   2,577    1,948    2,692

Deferred tax assets

   14,327    14,710    16,053
              
   87,367    85,416    90,896

Current assets

        

Inventories

   22,718    24,126    29,397

Trade receivables

   66,410    62,695    69,385

Customer financing, current

   1,444    1,885    2,132

Other current receivables

   15,146    15,853    17,429

Short-term investments

   53,926    56,816    51,980

Cash and cash equivalents

   22,798    21,039    15,610
              
   182,442    182,414    185,933

Total assets

   269,809    267,830    276,829
              

EQUITY AND LIABILITIES

        

Equity

        

Stockholders’ equity

   139,870    140,290    138,309

Minority interests in equity of subsidiaries

   1,157    1,163    2,115
              
   141,027    141,453    140,424

Non-current liabilities

        

Post-employment benefits

   8,533    8,061    8,498

Provisions, non-current

   461    499    513

Deferred tax liabilities

   2,270    2,307    2,431

Borrowings, non-current

   29,996    29,257    29,491

Other non-current liabilities

   2,035    2,200    2,296
              
   43,295    42,324    43,229

Current liabilities

        

Provisions, current

   11,970    11,566    12,548

Borrowings, current

   2,124    2,017    3,797

Trade payables

   18,864    17,806    20,266

Other current liabilities

   52,529    52,664    56,565
              
   85,487    84,053    93,176

Total equity and liabilities

   269,809    267,830    276,829
              

Of which interest-bearing liabilities and post-employment benefits

   40,653    39,335    41,786

Net cash

   36,071    38,520    25,804

Assets pledged as collateral

   550    558    579

Contingent liabilities

   1,245    884    872

 

Ericsson Second Quarter Report 2010, July 23, 2010    17


Table of Contents

Consolidated Statement of Cash Flows

 

     Apr - Jun    Jan - Jun    Jan -  Dec
2009

SEK million

   2009    2010    2009    2010   

Operating activities

              

Net income

   797    2,027    2,630    3,301    4,127

Adjustments to reconcile net income to cash

              

Taxes

   -640    -560    -1,268    -726    -1,011

Earnings/dividends in JV and associated companies

   1,718    364    3,482    677    6,083

Depreciation, amortization and impairment losses

   3,112    2,304    4,964    5,437    12,124

Other

   -643    -260    -1,266    -695    -340
                    

Net income affecting cash

   4,344    3,875    8,542    7,994    20,983

Changes in operating net assets

              

Inventories

   1,606    -3,462    -756    -4,927    5,207

Customer financing, current and non-current

   -267    -208    -268    -806    598

Trade receivables

   5,017    -3,816    6,827    138    7,668

Trade payables

   -1,863    1,433    -3,223    478    -3,522

Provisions and post-employment benefits

   1,532    788    -1,733    -270    -2,950

Other operating assets and liabilities, net

   -1,238    -1,317    -3,116    -3,020    -3,508
                    
   4,787    -6,582    -2,269    -8,407    3,493

Cash flow from operating activities

   9,131    -2,707    6,273    -413    24,476

Investing activities

              

Investments in property, plant and equipment

   -1,189    -1,016    -2,207    -1,675    -4,006

Sales of property, plant and equipment

   114    45    139    92    534

Acquisitions/divestments of subsidiaries and other operations, net

   981    -868    -8,510    -1,948    -18,082

Product development

   -327    -724    -536    -1,002    -1,443

Other investing activities

   886    -1,819    -531    40    2,606

Short-term investments

   522    5,949    98    2,105    -17,071
                    

Cash flow from investing activities

   987    1,567    -11,547    -2,388    -37,462

Cash flow before financing activities

   10,118    -1,140    -5,274    -2,801    -12,986

Financing activities

              

Dividends paid

   -5,956    -6,401    -5,956    -6,401    -6,318

Other financing activities

   8,012    1,529    9,886    1,473    4,617
                    

Cash flow from financing activities

   2,056    -4,872    3,930    -4,928    -1,701

Effect of exchange rate changes on cash

   441    583    494    541    -328

Net change in cash

   12,615    -5,429    -850    -7,188    -15,015

Cash and cash equivalents, beginning of period

   24,348    21,039    37,813    22,798    37,813

Cash and cash equivalents, end of period

   36,963    15,610    36,963    15,610    22,798
                        

 

Ericsson Second Quarter Report 2010, July 23, 2010    18


Table of Contents

Consolidated Statement of Changes in Equity

 

SEK million

   Jan - Jun
2009
   Jan - Dec
2009
   Jan - Jun
2010

Opening balance

   142,084    142,084    141,027

Total comprehensive income

   6,467    4,612    4,766

Stock issue

   135    135    —  

Sale / Repurchase of own shares

   -107    -60    23

Stock purchase and stock option plans

   324    658    316

Dividends paid

   -5,956    -6,318    -6,401

Business combinations

   -3    -84    693
              

Closing balance

   142,944    141,027    140,424
              

 

Ericsson Second Quarter Report 2010, July 23, 2010    19


Table of Contents

Consolidated Income Statement – Isolated Quarters

 

     2009     2010  

SEK million

   Q1     Q2     Q3     Q4     Q1     Q2  

Net sales

   49,569      52,142      46,433      58,333      45,112      47,972   

Cost of sales

   -31,957      -34,531      -30,455      -39,335      -28,527      -30,235   
                                    

Gross income

   17,612      17,611      15,978      18,998      16,585      17,737   

Gross margin (%)

   35.5   33.8   34.4   32.6   36.8   37.0

Research and development expenses

   -7,080      -8,451      -8,218      -9,306      -7,526      -7,751   

Selling and administrative expenses

   -6,863      -7,443      -5,279      -7,323      -7,008      -7,158   
                                    

Operating expenses

   -13,943      -15,894      -13,497      -16,629      -14,534      -14,909   

Other operating income and expenses

   342      1,640      222      878      302      500   
                                    

Operating income before shares in earnings of JV and associated companies

   4,011      3,357      2,703      3,247      2,353      3,328   

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

   8.1   6.4   5.8   5.6   5.2   6.9

Shares in earnings of JV and associated companies

   -2,236      -2,144      -1,559      -1,461      -372      -308   
                                    

Operating income

   1,775      1,213      1,144      1,786      1,981      3,020   

Financial income

   1,260      4      296      314      278      470   

Financial expenses

   -457      -79      -294      -719      -438      -596   
                                    

Income after financial items

   2,578      1,138      1,146      1,381      1,821      2,894   

Taxes

   -745      -341      -374      -656      -547      -867   
                                    

Net income

   1,833      797      772      725      1,274      2,027   
                                    

Net income attributable to:

            

- Stockholders of the Parent Company

   1,717      831      810      314      1,264      1,881   

- Minority interests

   116      -34      -38      411      10      146   

Other information

            

Average number of shares, basic (million)

   3,187      3,188      3,190      3,194      3,195      3,196   

Earnings per share, basic (SEK)1)

   0.54      0.26      0.25      0.10      0.40      0.59   

Earnings per share, diluted (SEK)1)

   0.54      0.26      0.25      0.10      0.39      0.58   
                                    

 

1)

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

 

Ericsson Second Quarter Report 2010, July 23, 2010    20


Table of Contents

Consolidated Statement of Cash Flows – Isolated Quarters

 

     2009    2010

SEK million

   Q1    Q2    Q3    Q4    Q1    Q2

Operating activities

                 

Net income

   1,833    797    772    725    1,274    2,027

Adjustments to reconcile net income to cash

                 

Taxes

   -628    -640    -1,137    1,394    -166    -560

Earnings/dividends in JV and associated companies

   1,764    1,718    1,319    1,282    313    364

Depreciation, amortization and impairment losses

   1,852    3,112    3,268    3,892    3,133    2,304

Other

   -623    -643    978    -52    -435    -260
                             

Net income affecting cash

   4,198    4,344    5,200    7,241    4,119    3,875

Changes in operating net assets

                 

Inventories

   -2,362    1,606    660    5,303    -1,465    -3,462

Customer financing, current and non-current

   -1    -267    394    472    -598    -208

Trade receivables

   1,810    5,017    3,655    -2,814    3,954    -3,816

Trade payables

   -1,360    -1,863    -2,096    1,797    -955    1,433

Provisions and post-employment benefits

   -3,265    1,532    -1,060    -157    -1,058    788

Other operating assets and liabilities, net

   -1,878    -1,238    -1,076    684    -1,703    -1,317
                             
   -7,056    4,787    477    5,285    -1,825    -6,582

Cash flow from operating activities

   -2,858    9,131    5,677    12,526    2,294    -2,707

Investing activities

                 

Investments in property, plant and equipment

   -1,018    -1,189    -690    -1,109    -659    -1,016

Sales of property, plant and equipment

   25    114    99    296    47    45

Acquisitions/divestments of subsidiaries and other operations, net

   -9,491    981    -750    -8,822    -1,080    -868

Product development

   -209    -327    -245    -662    -278    -724

Other investing activities

   -1,417    886    3,226    -89    1,859    -1,819

Short-term investments

   -424    522    -17,847    678    -3,844    5,949
                             

Cash flow from investing activities

   -12,534    987    -16,207    -9,708    -3,955    1,567

Cash flow before financing activities

   -15,392    10,118    -10,530    2,818    -1,661    -1,140

Financing activities

                 

Dividends paid

   —      -5,956    -20    -342    —      -6,401

Other financing activities

   1,874    8,012    535    -5,804    -56    1,529
                             

Cash flow from financing activities

   1,874    2,056    515    -6,146    -56    -4,872

Effect of exchange rate changes on cash

   53    441    -1,263    441    -42    583

Net change in cash

   -13,465    12,615    -11,278    -2,887    -1,759    -5,429

Cash and cash equivalents, beginning of period

   37,813    24,348    36,963    25,685    22,798    21,039

Cash and cash equivalents, end of period

   24,348    36,963    25,685    22,798    21,039    15,610
                             

 

Ericsson Second Quarter Report 2010, July 23, 2010    21


Table of Contents

Parent Company Income Statement

 

     Apr - Jun    Jan - Jun

SEK million

   2009    2010    2009    2010

Net sales

   26    8    264    18

Cost of sales

   -13    -5    9    -12
                   

Gross income

   13    3    273    6

Operating expenses

   -870    -564    -1,583    -1,880

Other operating income and expenses

   728    681    1,473    1,293
                   

Operating income

   -129    120    163    -581

Financial net

   3,929    5,299    5,056    5,370

Income after financial items

   3,800    5,419    5,219    4,789
                   

Transfers to (-) / from untaxed reserves

   —      —      —      —  

Taxes

   -2    -136    -372    64
                   

Net income

   3,798    5,283    4,847    4,853
                   

Statement of Comprehensive Income

 

     Apr - Jun    Jan - Jun

SEK million

   2009    2010    2009    2010

Net income

   3,798    5,283    4,847    4,853

Cash flow hedges

           

Gains/losses arising during the period

   —      136    612    136

Adjustments for amounts transferred to initial carrying amount of hegded items

   —      -136    -1,385    -136

Tax on items reported directly in or transferred from equity

   —      —      204    —  
                   

Other comprehensive income

   —      —      -569    —  
                   

Total comprehensive income

   3,798    5,283    4,278    4,853
                   

Parent Company Balance Sheet

 

SEK million

   Dec 31
2009
   Jun 30
2010

ASSETS

     

Fixed assets

     

Intangible assets

   2,219    1,160

Tangible assets

   527    505

Financial assets

   101,344    99,122
         
   104,090    100,787

Current assets

     

Inventories

   61    43

Receivables

   23,704    22,740

Short-term investments

   53,926    51,980

Cash and cash equivalents

   8,477    2,946
         
   86,168    77,709

Total assets

   190,258    178,496
         

STOCKHOLDERS’ EQUITY, PROVISIONS AND LIABILITIES

     

Equity

     

Restricted equity

   47,859    47,859

Non-restricted equity

   41,953    40,441
         
   89,812    88,300

Untaxed reserves

   915    915

Provisions

   1,069    1,082

Non-current liabilities

   57,011    54,502

Current liabilities

   41,451    33,697

Total stockholders’ equity, provisions and liabilities

   190,258    178,496
         

Assets pledged as collateral

   550    579

Contingent liabilities

   13,072    15,743
         

 

Ericsson Second Quarter Report 2010, July 23, 2010   

22


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 IFRS Interpretations Committee. The accounting policies adopted are consistent with those of the annual report for the year ended December 31, 2009, and should be read in conjunction with that annual report.

As from January 1, 2010, the Company has applied the following new or amended IFRS:

 

 

IFRS 3 Business Combinations (revised)

The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, an expansion of the definition of a business and a business combination, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition- related costs should be expensed as incurred.

 

 

IAS 27 Consolidated and separate financial statements (revised)

The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains or losses. The standard also specifies the ac- counting when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognized in income statement.

The following new or amended standards and interpretations have also been adopted:

 

 

IFRIC17, Distributions of Non-Cash Assets to Owners (Issued November 27, 2008)

 

 

IFRS 2, amendment, Group Cash-settled Share-based Payment Transactions (issued June 18, 2009)

 

 

Improvements to IFRSs (Issued April 16, 2009)

None of the new or amended standards and interpretations has had any significant impact on the financial result or position of the Company. There is no difference between IFRS effective as per June 30, 2010 and IFRS as endorsed by the EU. However, the impact on business combination accounting due to the revised IFRS 3 Business Combinations is dependent on type and size of any future arrangement involving business combination.

 

Ericsson Second Quarter Report 2010, July 23, 2010    23


Table of Contents

Accounting Policies (cont.)

Changes in external reporting

Change in segments

As of January 1, 2010, Ericsson reports the following segments: Networks, Global Services, Multimedia, Sony Ericsson and ST- Ericsson. The only change compared to previous years is that Network Rollout is now included in Global Services instead of Networks. All other segments are unchanged. With this change the external reporting is aligned with the new internal reporting structure.

Segments as of January 1, 2010:

Networks

Global Services

Of which Professional Services

Of which Managed Services

Of which Network Rollout

Multimedia

Sony Ericsson

ST-Ericsson

Change in geographical break down

As of January 1, 2010, the geographical reporting structure is changed. Instead of five geographical areas, ten regions are reported, mirroring the new internal geographical organization. A part called “Other” is also be reported, consisting of business not reported in the geographical structure, e.g. embedded modules, cables, power modules as well as intellectual property rights and licenses.

Regions as of January 1, 2010:

North America

Latin America

North Europe and Central Asia

Western and Central Europe

Mediterranean

Middle East

Sub-Saharan Africa

India

China and Northeast Asia

South East Asia and Oceania

Other

In 2008 and 2009 Ericsson reported top 15 countries. As of January 1, 2010, top five countries are reported.

EBITA replaces EBITDA

As of January 1, 2010, EBITA and EBITA margin for segments are reported. This is also reported for Network Rollout and Profes- sional Services in Global Services. For the Managed Services sales figures are reported. EBITA is defined as Earnings Before Interest, Tax, Amortizations and write-downs of acquired intangibles. EBITA margin is defined as Earnings Before Interest, Taxes, Amortizations and write-downs of acquired intangibles, as a percentage of Net Sales. Previous years, Ericsson has reported EBITDA. The shift to EBITA is done to better reflect the underlying business.

Numbers have been restated for 2009 accordingly.

 

Ericsson Second Quarter Report 2010, July 23, 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     2010  

Isolated quarters, SEK million

   Q1     Q2     Q3     Q4     Q1     Q2  

Networks1)

   28,842      28,795      24,504      31,844      24,704      25,472   

Global Services1)

   17,486      20,019      18,578      23,137      18,098      20,080   

Of which Professional Services

   12,799      14,077      12,780      16,466      13,251      14,838   

Of which Managed Services

   4,178      4,587      3,570      5,098      4,888      5,642   

Of which Network Rollout

   4,687      5,942      5,798      6,671      4,847      5,242   

Multimedia

   3,241      3,328      3,351      3,352      2,310      2,420   
                                    

Total

   49,569      52,142      46,433      58,333      45,112      47,972   
                                    
     2009     2010  

Sequential change, percent

   Q1     Q2     Q3     Q4     Q1     Q2  

Networks1)

   -25   0   -15   30   -22   3

Global Services1)

   -26   14   -7   25   -22   11

Of which Professional Services

   -21   10   -9   29   -20   12

Of which Managed Services

   -2   10   -22   43   -4   15

Of which Network Rollout

   -38   27   -2   15   -27   8

Multimedia

   -17   3   1   0   -31   5
                                    

Total

   -26   5   -11   26   -23   6
                                    
     2009     2010  

Year over year change, percent

   Q1     Q2     Q3     Q4     Q1     Q2  

Networks1)

   13   1   -13   -17   -14   -12

Global Services1)

   20   27   13   -3   3   0

Of which Professional Services

   28   28   9   2   4   5

Of which Managed Services

   37   37   -1   19   17   23

Of which Network Rollout

   4   24   24   -12   3   -12

Multimedia

   25   23   -4   -14   -29   -27
                                    

Total

   12   7   -6   -13   -9   -8
                                    
     2009     2010  

Year to date, SEK million

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

Networks1)

   28,842      57,637      82,141      113,985      24,704      50,176   

Global Services1)

   17,486      37,505      56,083      79,220      18,098      38,178   

Of which Professional Services

   12,799      26,876      39,656      56,122      13,251      28,089   

Of which Managed Services

   4,178      8,765      12,335      17,433      4,888      10,530   

Of which Network Rollout

   4,687      10,629      16,427      23,098      4,847      10,089   

Multimedia

   3,241      6,569      9,920      13,272      2,310      4,730   
                                    

Total

   49,569      101,711      148,144      206,477      45,112      93,084   
                                    
     2009     2010  

Year to date, year over year change, percent

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

Networks1)

   13   7   0   -5   -14   -13

Global Services1)

   20   24   20   12   3   2

Of which Professional Services

   28   28   21   15   4   5

Of which Managed Services

   37   37   24   22   17   20

Of which Network Rollout

   4   14   18   7   3   -5

Multimedia

   25   24   13   5   -29   -28
                                    

Total

   12   10   4   -1   -9   -8
                                    

 

1)

For 2009 Networks and Global Services are restated in accordance with the change in segments.

 

Ericsson Second Quarter Report 2010, July 23, 2010    25


Table of Contents

Operating Income by Segment by Quarter

 

     2009     2010  

Isolated quarters, SEK million

   Q1     Q2     Q3     Q4     Q1     Q2  

Networks1)

   3,067      1,265      1,138      2,128      1,540      2,507   

Global Services1)

   1,520      2,249      1,426      1,076      1,325      1,377   

Of which Professional Services

   1,749      2,265      1,628      1,347      1,419      1,331   

Of which Network Rollout

   -229      -16      -202      -271      -94      46   

Multimedia

   44      18      330      263      -335      -479   

Unallocated 2)

   -77      -323      -168      -287      -158      -128   
                                    

Subtotal Segments excluding Sony Ericsson and ST- Ericsson

   4,554      3,209      2,726      3,180      2,372      3,277   

Sony Ericsson

   -2,070      -1,543      -1,036      -1,044      76      134   

ST-Ericsson 3)

   -709      -453      -546      -351      -467      -391   
                                    

Subtotal Sony Ericsson and ST-Ericsson

   -2,779      -1,996      -1,582      -1,395      -391      -257   
                                    

Total

   1,775      1,213      1,144      1,785      1,981      3,020   
                                    
     2009     2010  

Year to date, SEK million

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

Networks1)

   3,067      4,332      5,470      7,598      1,540      4,047   

Global Services1)

   1,520      3,769      5,195      6,271      1,325      2,702   

Of which Professional Services

   1,749      4,015      5,643      6,990      1,419      2,750   

Of which Network Rollout

   -229      -246      -448      -719      -94      -48   

Multimedia

   44      62      392      655      -335      -814   

Unallocated 2)

   -77      -400      -568      -855      -158      -286   
                                    

Subtotal Segments excluding Sony Ericsson and ST- Ericsson

   4,554      7,763      10,489      13,669      2,372      5,649   

Sony Ericsson

   -2,070      -3,613      -4,649      -5,693      76      210   

ST-Ericsson 3)

   -709      -1,162      -1,708      -2,059      -467      -858   
                                    

Subtotal Sony Ericsson and ST-Ericsson

   -2,779      -4,775      -6,357      -7,752      -391      -648   
                                    

Total

   1,775      2,988      4,132      5,917      1,981      5,001   
                                    
Operating Margin by Segment by Quarter             
     2009     2010  

As percentage of net sales, isolated quarters

   Q1     Q2     Q3     Q4     Q1     Q2  

Networks1)

   11   4   5   7   6   10

Global Services1)

   9   11   8   5   7   7

Of which Professional Services

   14   16   13   8   11   9

Of which Network Rollout

   -5   0   -3   -4   -2   1

Multimedia

   1   1   10   8   -15   -20
                                    

Subtotal excluding Sony Ericsson and ST- Ericsson

   9   6   6   5   5   7
                                    
     2009     2010  

As percentage of net sales, Year to date

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

Networks1)

   11   8   7   7   6   8

Global Services1)

   9   10   9   8   7   7

Of which Professional Services

   14   15   14   12   11   10

Of which Network Rollout

   -5   -2   -3   -3   -2   0

Multimedia

   1   1   4   5   -15   -17
                                    

Subtotal excluding Sony Ericsson and ST- Ericsson

   9   8   7   7   5   6
                                    

 

1)

For 2009 Networks and Global Services are restated in accordance with the change in segments.

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.

 

Ericsson Second Quarter Report 2010, July 23, 2010    26


Table of Contents

EBITA by Segment by Quarter

 

     2009     2010  

Isolated quarters, SEK million

   Q1     Q2     Q3     Q4     Q1     Q2  

Networks1)

   3,604      3,071      3,064      4,268      3,052      3,355   

Global Services1)

   1,606      2,334      1,671      1,259      1,770      1,523   

Of which Professional Services

   1,825      2,339      1,863      1,503      1,764      1,449   

Of which Network Rollout

   -219      -5      -192      -244      6      74   

Multimedia

   249      226      468      514      -123      -262   

Unallocated 2)

   -73      -327      -162      -284      -158      -127   
                                    

Subtotal Segments excluding Sony Ericsson and ST- Ericsson

   5,386      5,304      5,041      5,757      4,541      4,489   

Sony Ericsson

   -2,070      -1,543      -1,036      -1,044      76      134   

ST-Ericsson 3)

   -709      -453      -546      -351      -467      -391   
                                    

Subtotal Sony Ericsson and ST-Ericsson

   -2,779      -1,996      -1,582      -1,395      -391      -257   
                                    

Total

   2,607      3,308      3,459      4,362      4,150      4,232   
                                    
     2009     2010  

Year to date, SEK million

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

Networks1)

   3,604      6,675      9,739      14,007      3,052      6,407   

Global Services1)

   1,606      3,940      5,611      6,870      1,770      3,293   

Of which Professional Services

   1,825      4,165      6,028      7,531      1,764      3,213   

Of which Network Rollout

   -219      -225      -417      -661      6      80   

Multimedia

   249      475      943      1,457      -123      -385   

Unallocated 2)

   -73      -400      -562      -846      -158      -285   
                                    

Subtotal Segments excluding Sony Ericsson and ST- Ericsson

   5,386      10,690      15,731      21,488      4,541      9,030   

Sony Ericsson

   -2,070      -3,613      -4,649      -5,693      76      210   

ST-Ericsson 3)

   -709      -1,162      -1,708      -2,059      -467      -858   
                                    

Subtotal Sony Ericsson and ST-Ericsson

   -2,779      -4,775      -6,357      -7,752      -391      -648   
                                    

Total

   2,607      5,915      9,374      13,736      4,150      8,382   
                                    
EBITA Margin by Segment by Quarter             
     2009     2010  

As percentage of net sales, isolated quarters

   Q1     Q2     Q3     Q4     Q1     Q2  

Networks1)

   13   11   13   13   12   13

Global Services1)

   9   12   9   5   10   8

Of which Professional Services

   14   17   15   9   13   10

Of which Network Rollout

   -5   0   -3   -4   0   1

Multimedia

   8   7   14   15   -5   -11
                                    

Subtotal excluding Sony Ericsson and ST- Ericsson

   11   10   11   10   10   9
                                    
     2009     2010  

As percentage of net sales, Year to date

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

Networks1)

   13   12   12   12   12   13

Global Services1)

   9   11   10   9   10   9

Of which Professional Services

   14   16   15   13   13   11

Of which Network Rollout

   -5   -2   -3   -3   0   1

Multimedia

   8   7   10   11   -5   -8
                                    

Subtotal excluding Sony Ericsson and ST- Ericsson

   11   11   11   10   10   10
                                    

 

1)

For 2009 Networks and Global Services are restated in accordance with the change in segments.

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.

 

Ericsson Second Quarter Report 2010, July 23, 2010    27


Table of Contents

Net Sales by Region by Quarter

 

     2009     2010  

Isolated quarters, SEK million

   Q1     Q2     Q3     Q4     Q1     Q2  

North America

   4,762      5,734      3,980      9,436      9,498      13,050   

Latin America

   4,376      4,797      4,993      5,859      3,964      4,200   

Northern Europe & Central Asia1 ) 2)

   2,889      2,884      2,709      3,499      2,300      2,679   

Western & Central Europe2 )

   5,387      5,437      5,494      6,141      5,235      4,414   

Mediterranean2)

   6,131      6,797      5,181      7,052      5,060      5,630   

Middle East

   3,956      4,750      4,503      5,041      3,948      3,796   

Sub Saharan Africa

   4,677      3,643      3,190      3,831      2,418      2,951   

India

   4,025      3,653      4,156      3,428      2,303      1,351   

China & North East Asia

   5,790      7,171      5,600      7,399      4,950      4,607   

South East Asia & Oceania

   5,209      5,679      4,790      5,171      3,517      3,643   

Other1) 2)

   2,367      1,597      1,837      1,476      1,919      1,651   
                                    

Total

   49,569      52,142      46,433      58,333      45,112      47,972   
                                    

1)        Of which Sweden

   1,197      1,091      1,076      732      1,047      996   

2)        Of which EU

   12,604      12,595      11,033      13,081      11,065      10,384   
                                    
     2009     2010  

Sequential change, percent

   Q1     Q2     Q3     Q4     Q1     Q2  

North America

   3   20   -31   137   1   37

Latin America

   -44   10   4   17   -32   6

Northern Europe & Central Asia1 ) 2)

   -44   0   -6   29   -34   16

Western & Central Europe2 )

   -21   1   1   12   -15   -16

Mediterranean 2)

   -37   11   -24   36   -28   11

Middle East

   -26   20   -5   12   -22   -4

Sub Saharan Africa

   -4   -22   -12   20   -37   22

India

   -13   -9   14   -18   -33   -41

China & North East Asia

   -32   24   -22   32   -33   -7

South East Asia & Oceania

   -20   9   -16   8   -32   4

Other1) 2)

   -17   -33   15   -20   30   -14
                                    

Total

   -26   5   -11   26   -23   6
                                    

1)        Of which Sweden

   -50   -9   -1   -32   43   -5

2)        Of which EU

   -31   0   -12   19   -15   -6
                                    
     2009     2010  

Year-over-year change, percent

   Q1     Q2     Q3     Q4     Q1     Q2  

North America

   63   46   -2   104   99   128

Latin America

   7   -2   -18   -25   -9   -12

Northern Europe & Central Asia1 ) 2)

   -5   -9   -23   -32   -20   -7

Western & Central Europe2 )

   11   14   9   -10   -3   -19

Mediterranean2)

   -4   3   -23   -28   -17   -17

Middle East

   -5   12   10   -6   0   -20

Sub Saharan Africa

   47   5   -17   -21   -48   -19

India

   42   -5   7   -26   -43   -63

China & North East Asia

   27   38   50   -14   -15   -36

South East Asia & Oceania

   29   15   -13   -20   -32   -36

Other1) 2)

   -42   -53   -33   -48   -19   3
                                    

Total

   12   7   -6   -13   -9   -8
                                    

1)        Of which Sweden

   -40   -53   -51   -69   -13   -9

2)        Of which EU

   -1   -6   -16   -29   -12   -18
                                    

 

Ericsson Second Quarter Report 2010, July 23, 2010    28


Table of Contents

Net Sales by Region by Quarter (cont.)

 

     2009     2010  

Year to date, SEK million

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

North America

   4,762      10,496      14,476      23,912      9,498      22,548   

Latin America

   4,376      9,173      14,166      20,025      3,964      8,164   

Northern Europe & Central Asia1) 2)

   2,889      5,773      8,482      11,981      2,300      4,979   

Western & Central Europe2 )

   5,387      10,824      16,318      22,459      5,235      9,649   

Mediterranean2)

   6,131      12,928      18,109      25,161      5,060      10,690   

Middle East

   3,956      8,706      13,209      18,250      3,948      7,744   

Sub Saharan Africa

   4,677      8,320      11,510      15,341      2,418      5,369   

India

   4,025      7,678      11,834      15,262      2,303      3,654   

China & North East Asia

   5,790      12,961      18,561      25,960      4,950      9,557   

South East Asia & Oceania

   5,209      10,888      15,678      20,849      3,517      7,160   

Other1) 2)

   2,367      3,964      5,801      7,277      1,919      3,570   
                                    

Total

   49,569      101,711      148,144      206,477      45,112      93,084   
                                    

1)        Of which Sweden

   1,197      2,288      3,364      4,096      1,047      2,043   

2)        Of which EU

   12,604      25,199      36,232      49,313      11,065      21,449   
                                    

Year to date, year-over-year change, percent

   2009     2010  
   Jan-Mar     Jan-Jun     Jan-Sep     Jan-Dec     Jan-Mar     Jan-Jun  

North America

   63   53   33   54   99   115

Latin America

   7   2   -6   -13   -9   -11

Northern Europe & Central Asia1) 2)

   -5   -7   -13   -19   -20   -14

Western & Central Europe2 )

   11   13   11   4   -3   -11

Mediterranean2)

   -4   -1   -8   -15   -17   -17

Middle East

   -5   4   6   2   0   -11

Sub Saharan Africa

   47   25   10   0   -48   -35

India

   42   15   12   0   -43   -52

China & North East Asia

   27   33   37   18   -15   -26

South East Asia & Oceania

   29   21   8   -1   -32   -34

Other1) 2)

   -42   -47   -44   -45   -19   -10
                                    

Total

   12   10   4   -1   -9   -8
                                    

1)        Of which Sweden

   -40   -47   -48   -54   -13   -11

2)        Of which EU

   -1   -4   -8   -14   -12   -15
                                    

 

Ericsson Second Quarter Report 2010, July 23, 2010    29


Table of Contents

External Net Sales by Region 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

Q2 2010

   Networks     Global
Services
    Multimedia     Total  

North America

   8,218      4,538      294      13,050   

Latin America

   2,233      1,825      142      4,200   

Northern Europe & Central Asia

   1,444      1,084      151      2,679   

Western & Central Europe

   1,544      2,613      257      4,414   

Mediterranean

   2,483      2,782      365      5,630   

Middle East

   1,707      1,760      329      3,796   

Sub Saharan Africa

   1,202      1,401      348      2,951   

India

   637      657      57      1,351   

China & North East Asia

   2,880      1,599      128      4,607   

South East Asia & Oceania

   1,746      1,754      143      3,643   

Other

   1,378      67      206      1,651   
                        

Total

   25,472      20,080      2,420      47,972   
                        

Share of Total

   53   42   5   100
                        

Year to date, SEK million

Jan - Jun 2010

   Networks     Global
Services
    Multimedia     Total  

North America

   14,164      7,844      540      22,548   

Latin America

   4,487      3,300      377      8,164   

Northern Europe & Central Asia

   2,607      2,048      324      4,979   

Western & Central Europe

   3,819      5,340      490      9,649   

Mediterranean

   4,912      5,150      628      10,690   

Middle East

   3,701      3,464      579      7,744   

Sub Saharan Africa

   2,121      2,667      581      5,369   

India

   2,053      1,334      267      3,654   

China & North East Asia

   5,966      3,346      245      9,557   

South East Asia & Oceania

   3,374      3,538      248      7,160   

Other

   2,972      147      451      3,570   
                        

Total

   50,176      38,178      4,730      93,084   
                        

Share of Total

   54   41   5   100
                        

Top 5 Countries in Sales

 

Country

   Q2
2009
    Q2
2010
    Jan - Jun
2009
    Jan - Jun
2010
 

United States

   10