FOURTH QUARTER REPORT

(1)

FOURTH QUARTER REPORT

(2)

HENRY STÉNSON

Senior Vice President Communications

FOURTH QUARTER REPORT

(3)

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.

FOURTH QUARTER REPORT

(4)

CARL-HENRIC SVANBERG

President and CEO

FOURTH QUARTER REPORT

(5)

”The mobile phone is the single most transformational tool for development in Africa”

J. Sachs, special advisor to UN Secretary General

4 billion mobile subscriptions

–

A significant milestone

Mobile broadband breakthrough

–

New set of smart phones and players – HSPA PC modules new standard

Accelerated focus on all-IP convergence

–

Enables new services and reduces cost

Financial crisis in focus

–

Long-term positive fundamentals remains

(6)

Ericsson in 2008

Sales of SEK 208.9 (187.8) b, up 11%

Operating income SEK 23.5 (23.5) b, excl Sony Ericsson

Cash flow of SEK 24.0 (19.2) b, cash conversion 92% (66%)

Net cash position SEK 34.7 (24.3) b

Restructuring charges of SEK 6.7 b

Board to propose dividend of SEK 1.85 per share

Sony Ericsson significantly affected by economic slowdown

(7)

The global economic slowdown

Financially strong operators, loaded networks, growing traffic

–

Effects on the mobile network market should not be that significant

So far hardly any effects on mobile network investments

–

Unreasonable that this will continue throughout 2009

Handset market clearly affected

–

Replacements affected but not usage

(8)

Cost reductions 2008 completed

Initial target of SEK 4.0 b, savings and charges

Actual savings of SEK 6.5 b and charges of SEK 6.7 b

Charges in Q4 of SEK 2.3 b

(9)

Further restructuring charges of SEK 6-7 b

Targeting savings of SEK 10 b by second half 2010

50/50 split of cost of sales and operating expenses

Technology synergies and IP transformation

–

Fewer software platforms and increased hardware reuse

–

Strategy and capabilities to remain intact

Consolidation of R&D sites, layoffs and fewer consultants

Some 5,000 employees globally across all functions

–

Of which some 1,000 employees in Sweden

(10)

Strong fourth quarter sales SEK 67.0 (54.5) b

–

Positive exchange rate effect

–

Strong ending of the year in all regions

Operating income SEK 9.2 (7.6) b

–

Contribution from Sony Ericsson SEK -0.6 (2.3) b

–

Capital gain of SEK 0.8 b from divestment of Symbian shares

Cash flow SEK 7.0 (12.0) b

All numbers exclude restructing charges

(11)

Growing demand for mobile broadband

Services close to 50% of sales – focus on managed services

Strong performance in Germany, Denmark and Italy

Positive currency impact

Regional Q4 comments

Western Europe sales 5% YoY, -2% FY

(12)

Regional Q4 comments

Central Europe, Middle East, Africa sales 24% YoY, 9% FY

SEK m

High business activities has translated into sales growth

Strong performance in Nigeria, Saudi Arabia, South Africa, Russia

(13)

Regional Q4 comments

Asia Pacific sales 49% YoY, 16% FY

SEK m

India Ericsson’s largest and fastest growing market

Japan and Indonesia strong,

fifth and sixth largest markets

(14)

Regional Q4 comments

Latin America sales 16% YoY, 25% FY

SEK m

A good year with 3G as well as 2G expansions

Mexico and Brazil strong development – no financial effects yet

(15)

Regional Q4 comments

North America sales 13% YoY, 34% FY

SEK m

Consumer breakthrough for mobile broadband

Continued HSPA rollouts and expansions

(16)

© Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 2009-01-212009-01-212009-01-212009-01-29 © Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008

FOURTH QUARTER REPORT

2008

HANS VESTBERG

(17)

Q4 financial highlights

1) Excluding restructuring charges of SEK 3.0 b. Q4 2008, SEK 2.0 b. Q3, SEK 1.8 b. Q2 and SEK 0.8 b. Q1

1)

SEK b.

Fourth quarter

Third quarter

Full year

2008

1)

₂₀₀₇

_%

₂₀₀₈

1)

_%

₂₀₀₈

1)

₂₀₀₇

_%

Net sales

67.0

54.5 23 %

49.2 36 %

208.9

187.8 11 %

Gross margin

35.2%

36.1%

-

37.0%

-

36.8%

39.3%

-Operating income

9.2

7.6 21 %

5.7 62 %

23.9

30.6 -22 %

Operating margin

13.7%

14.0%

-

11.5%

-

11.4%

16.3%

-Operating margin ex Sony Ericsson

14.6%

9.8%

-

11.5%

-

11.3%

12.5%

-

Net sales up 11% year-over-year, limited currency impact

Slight gross margin decline due to high completion of large buildouts

(18)

1) Excluding restructuring charges of SEK 3.0 b. Q4 2008, SEK 2.0 b. Q3, SEK 1.8 b. Q2 and SEK 0.8 b. Q1 2) Including restructuring charges

3) Attributable to stockholders of the Parent Company, excluding minority interest

Q4 financial highlights

SEK b.

Fourth quarter

Third quarter

Full year

2008

2007

%

2008

%

2008

2007

%

Income after financial items

9.5 1)

_7.6

_25%

_6.2

1)

_54%

_24.8

1)

_30.7

_-19%

Net income

3)

_3.9

2)

_5.6

_-31%

_2.8

2)

_37%

_11.3

2)

_21.8

_-48%

EPS, SEK

3)

_1.21

2)

_1.77

_-32%

_0.89

2)

_36%

_3.52

2)

_6.84

_-49%

Cash flow from operating activities

7.0

12.0 -

3.8 -

24.0

19.2 -

Continued positive cash flow development, SEK 24.0 (19.2) b YTD

Cash conversion of 92% (66%) YTD

Net income SEK 3.9 b

- Restructuring charges of SEK 6.7 b

(19)

Change in net cash 2008

+4.0

-0.4

+2.3

+4.4

24.3

34.7 Change in net cash 10.4 b

Dividend -8.0 b

(20)

Long-term debt maturity profile Q4 2008

Back-up facility of USD 2 b (SEK ~15 b) available if needed

(21)

Networks

1) Excluding effects from restructuring.

Strong ending of the year – continued market share gains

Record deliveries for GSM – 3G licenses in China and India

Encouraging “firsts” in IP broadband portfolio

Clear leadership in softswitch and blade cluster

Fourth quarter

Third quarter

Full year

SEK b.

2008

1)

₂₀₀₇

_%

₂₀₀₈

1)

_%

₂₀₀₈

1)

₂₀₀₇

_%

Net sales

45.8

37.5 22 %

33.0 39%

142.0

129.0 10%

Of which network rollout

7.6

6.4 17 %

4.7 61%

21.5

18.5 16%

EBITDA margin

17%

15%

-

15%

-

16%

19%

(22)

Multimedia

1) Excluding effects from restructuring.

2)Affected by SEK 0.2 b due to changed allocation of capitalized development expenses in Q2 3) Including effects of divestment of shares in Symbian of SEK 0.8 b.

4) First quarter 2008 is restated for the transfer of the IPX operation from Professional Services to Multimedia

Fourth quarter

Third quarter

Full year

SEK b.

2008

1)

₂₀₀₇

_%

₂₀₀₈

1)

_%

₂₀₀₈

1) 4)

₂₀₀₇

_%

Net sales

5.0

4.9 4%

4.4 14%

17.9

15.9 13%

EBITDA margin

21%

-3%

-

12%

2)

_-

_11%

_4%

-Operating margin

12%

3)

_-9%

_-

_3%

_-

_1%

_-1%

-

21% growth year-over-year for comparable units in Q4

Economic slowdown impacting mobile platforms

Good growth in Tandberg Television and revenue management

(23)

Professional Services

1) Excluding effects from restructuring.

2) First quarter 2008 is restated for the transfer of the IPX operation from Professional Services to Multimedia.

Fourth quarter

Third quarter

Full year

SEK b.

2008

1)

₂₀₀₇

_%

₂₀₀₈

1)

_%

₂₀₀₈

1) 2)

₂₀₀₇

_%

Net sales

16.2

12.1 34%

11.8 38 %

49.0

42.9 14%

Of which managed services

4.3

3.3 29 %

3.5 23 %

14.3

12.2 17 %

EBITDA margin

19%

16 %

-

19 %

-

17 %

16 %

-Operating margin

18 %

15 %

-

16 %

-

16 %

15 %

-

Strong growth across portfolio

11 new managed services contracts – world leading position

–

250 m subscribers in managed operations - 60% in high-growth markets

Healthy margins with positive effects from cost efficiency activities

–

Leveraging scale in managed operations

(24)

© Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 2009-01-212009-01-212009-01-21 © Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008

FOURTH QUARTER REPORT

FOURTH QUARTER REPORT

HENRY STÉNSON

Senior Vice President Communications

FOURTH QUARTER REPORT

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.

FOURTH QUARTER REPORT

CARL-HENRIC SVANBERG

President and CEO

FOURTH QUARTER REPORT

”The mobile phone is the single most transformational tool for development in Africa”

J. Sachs, special advisor to UN Secretary General



4 billion mobile subscriptions

–

A significant milestone



Mobile broadband breakthrough

–

New set of smart phones and players – HSPA PC modules new standard



Accelerated focus on all-IP convergence

–

Enables new services and reduces cost



Financial crisis in focus

–

Long-term positive fundamentals remains

Ericsson in 2008



Sales of SEK 208.9 (187.8) b, up 11%



Operating income SEK 23.5 (23.5) b, excl Sony Ericsson



Cash flow of SEK 24.0 (19.2) b, cash conversion 92% (66%)



Net cash position SEK 34.7 (24.3) b



Restructuring charges of SEK 6.7 b



Board to propose dividend of SEK 1.85 per share



Sony Ericsson significantly affected by economic slowdown

The global economic slowdown



Financially strong operators, loaded networks, growing traffic

–

Effects on the mobile network market should not be that significant



So far hardly any effects on mobile network investments

–

Unreasonable that this will continue throughout 2009



Handset market clearly affected

–

Replacements affected but not usage

Cost reductions 2008 completed



Initial target of SEK 4.0 b, savings and charges



Actual savings of SEK 6.5 b and charges of SEK 6.7 b



Charges in Q4 of SEK 2.3 b



Further restructuring charges of SEK 6-7 b



Targeting savings of SEK 10 b by second half 2010



50/50 split of cost of sales and operating expenses



Technology synergies and IP transformation

–

Fewer software platforms and increased hardware reuse

–

Strategy and capabilities to remain intact

