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FOURTH QUARTER REPORT

2007

This presentation contains forward looking statements.

Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read our earnings reports and our most recent annual report for a better understanding of these risks and uncertainties.

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FOURTH QUARTER REPORT

2007

CARL-HENRIC SVANBERG

(3)

40 60 80 100 120 140 160 180 200 SEK b

Ericsson in 2007

ƒ

Sales of SEK 187.8 (179.8) b

– 8% organic growth in constant currencies

ƒ

Significant market share gains

– Disappointing margin decline - shift in business mix

ƒ

Operating income SEK 30.6 (35.8) b

ƒ

Cash flow of SEK 19.2 (18.5) b

Sales 2003-2007

(4)

2008-02-01 4

© Copyright Telefon AB LM Ericsson 2008. All rights reserved FOURTH QUARTER REPORT 2007

The networks market in 2007

Mobile infrastructure market tougher

ƒ Started at mid single digit growth but ended flattish

ƒ Operator consolidation, political unrest in some emerging markets

ƒ Change in competitive landscape continues

Fundamentals have not changed

ƒ 3.3 b subscriptions, up 50 m/month

ƒ 180 m WCDMA subscriptions, up 6.5 m/month - dramatic data growth

(5)

Q4 in short

Continued effects from business mix and technology shift

ƒ Sales SEK 54.5 (54.2) b

ƒ Operating income SEK 7.6 (12.2) b – operating margin 14% (23%)

ƒ Cash flow SEK 12.0 (11.0) b

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2008-02-01 6

© Copyright Telefon AB LM Ericsson 2008. All rights reserved FOURTH QUARTER REPORT 2007

Q4 in short

Continued effects from business mix and technology shift

ƒ Sales SEK 54.5 (54.2) b

ƒ Operating income SEK 7.6 (12.2) b – operating margin 14% (23%)

ƒ Cash flow SEK 12.0 (11.0) b

(7)

Long-term business ambitions

Best in class margins

Growth

Profitability

Cash flow

Cash conversion

> 70%

(8)

2008-02-01 8

© Copyright Telefon AB LM Ericsson 2008. All rights reserved FOURTH QUARTER REPORT 2007

Our planning assumptions for 2008

ƒ

Planning for flattish mobile infrastructure market

ƒ

Continued good growth for the professional services market

ƒ

Industry fundamentals and consumer behavior support

more positive longer-term outlook

(9)

Cost reductions of SEK 4 b

Accelerated operational excellence in all areas

ƒ

Savings of SEK 4 b to safeguard our competitive position

ƒ

All areas affected

– SG&A, sourcing, supply, service delivery main focus areas

ƒ

Reduction of some 1,000 employees in Sweden

– Through voluntary programs as far as possible

ƒ

Full effects in 2009

ƒ

SEK ~4 b in charges

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FOURTH QUARTER REPORT

2007

HANS VESTBERG

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Q4 financial highlights

ƒ Full year organic sales growth in constant currencies 8%

ƒ Margins affected by business mix and slower sales in certain markets

ƒ Q4 opex SEK 15.2 b. – seasonality and newly acquired companies

2007 2006 Full year

SEK b. Q4 Q3 Q4 2007 2006

Net sales 54.5 43.5 54.2 187.8 179.8

Sales growth (YoY) 0% - - 4%

-Gross margin 36.1% 35.6% 42.2% 39.3% 41.7%

Operating income 7.6 5.6 12.2 30.6 35.8

Operating margin 14.0% 12.9% 22.5% 16.3% 19.9%

Operating margin

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2008-02-01 12

© Copyright Telefon AB LM Ericsson 2008. All rights reserved FOURTH QUARTER REPORT 2007

Q4 financial highlights

ƒ Strong cash flow in Q4

– Improved working capital

– SEK 1.6 b in payment from 3 UK

ƒ Cash conversion for full year of 66% (57%)

– Still room for improvement

*Attributable to stockholders of the parent company, excluding minority interest.

2007 2006 Full year

SEK b. Q4 Q3 Q4 2007 2006

Income after financial items 7.6 5.6 12.2 30.7 36.0

Net income* 5.6 4.0 9.7 21.8 26.3

EPS, SEK * 0.35 0.25 0.61 1.37 1.65

(13)

Networks

2007 2006 Full year

SEK b. Q4 Q3 Q4 2007 2006

Net sales 37.5 28.5 39.0 129.0 127.7

Sales growth (YoY) -4% - - 1%

-EBITDA margin 15% 13% 26% 19% 22%

Operating margin 10% 8% 21% 13% 17%

ƒ Significantly increased market share in increasingly challenging market

ƒ Sales affected by weakening USD

ƒ Market and product mix continues to affect sales and margins

(14)

2008-02-01 14

© Copyright Telefon AB LM Ericsson 2008. All rights reserved FOURTH QUARTER REPORT 2007

Professional Services

ƒ Professional services up 19% in constant currencies

ƒ Managed services and systems integration show fastest growth

– 185 million subscribers in managed networks

– Acquisition of HyC – IPTV systems integration company

ƒ 3 UK contract renegotiated due to network sharing

– Scope decreased, will affect sales but not margins

2007 2006 Full year

SEK b. Q4 Q3 Q4 2007 2006

Net sales 12.1 11.0 10.6 42.9 36.8

Of which managed

Services 3.3 3.4 2.5 12.2 9.5

Sales growth (YoY) 15% - - 16%

-EBITDA margin 16% 17% 16% 16% 16%

(15)

Multimedia

ƒ Mix of existing sound businesses and new investment areas

– Sales and margins vary over quarters

ƒ Building positions IPTV and IMS

ƒ Acquisitions developing well

– LHS, Mobeon, Drutt and Tandberg

ƒ Weak quarter but full year more representative

2007 2006 Full year

SEK b. Q4 Q3 Q4 2007 2006

Net sales 4.9 4.0 4.5 15.9 13.9

Sales growth (YoY) 7% - - 14%

-EBITDA margin -3% 6% 13% 4% 6%

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2008-02-01 16

© Copyright Telefon AB LM Ericsson 2008. All rights reserved FOURTH QUARTER REPORT 2007

Multimedia

2007 2006 Full year

SEK b. Q4 Q3 Q4 2007 2006

Net sales 4.9 4.0 4.5 15.9 13.9

Sales growth (YoY) 7% - - 14%

-EBITDA margin -3% 6% 13% 4% 6%

Operating margin -9% 1% 12% -1% 5%

ƒ Mix of existing sound businesses and new investment areas

– Sales and margins vary over quarters

ƒ Building positions IPTV and IMS

ƒ Acquisitions developing well

– LHS, Mobeon, Drutt and Tandberg

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0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 20 000 Q 1 04 Q 2 04 Q3 04 Q 40 04 Q1 05 Q 2 05 Q3 05 Q4 05 Q 1 06 Q 2 06 Q 3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q 407 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 Q1 0 4 Q2 0 4 Q3 0 4 Q4 0 04 Q1 0 5 Q2 0 5 Q3 0 5 Q4 0 5 Q1 0 6 Q2 0 6 Q3 0 6 Q4 0 6 Q1 07 Q2 0 7 Q3 0 7 Q4 07 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000

Regional 2007 comments

Asia Pacific FY: +14% 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 20 000 Q1 04 Q2 04Q3 04 Q4 0 04 Q1 05Q2 05Q3 05Q4 05 Q1 06 Q2 06Q3 06 Q4 06 Q1 07 Q2 07Q3 07Q407

Central Europe, Middle East and Africa FY: +5% Western Europe FY: -1% North America FY: -15% Latin America FY: +12% CAGR -5% 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 20 000 CAGR 8% CAGR 24% CAGR 10% CAGR 13%

(18)

2008-02-01 18

© Copyright Telefon AB LM Ericsson 2008. All rights reserved FOURTH QUARTER REPORT 2007

Regional Q4 comments

Effects from operator consolidation, UK, Italy Focus shifted to 3G

Good services momentum

Network buildouts and expansions Middle East slower

3G taking off in Central Europe China ended strong

Pakistan, Bangladesh and Thailand affected by unrest

Australia down after major rollouts 2006 Continued 2G expansions

Accelerated 3G buildouts Verizon going for LTE

Strong ending after slower year

Asia Pacific Q: -2% FY: +14%

Central Europe, Middle East and Africa Q:-1% FY: +5% Western Europe Q: -10% FY: -1% North America Q: +9% FY: -15% Latin America Q: +41% FY: +12%

(19)

Sony Ericsson 2007 highlights

ƒ 103 million units, up 38% year-on-year – market share of >9%

ƒ Margins remain strong when company shift to broader portfolio

(20)

2008-02-01 20

© Copyright Telefon AB LM Ericsson 2008. All rights reserved FOURTH QUARTER REPORT 2007

Summary

ƒ

Good year but disappointing second half

– Significantly strengthened market share

– Network margins affected by mix shift

ƒ

Planning for flattish mobile networks market 2008

– Actions to safeguard competitive position

– Competitive landscape continues to evolve

ƒ

Fundamentals support more positive longer-term outlook

(21)

FOURTH QUARTER REPORT

2007

References

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