Form 6-K

 

 

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

April 26, 2012

 

 

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

THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENT ON FORM F-3 (NO. 333-180880) OF TELEFONAKTIEBOLAGET LM ERICSSON (PUBL.) AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.

 

 

 


LOGO

 

 

 

CONTENTS

     

Financial Highlights

    2   

Segment Results

    5   

Regional Overview

    8   

Market Data

    9   

Parent Company Information

    9   

Other Information

    10   

Editor’s Note

    12   

For Further Information, Please Contact

    12   

Safe Harbor statement

    13   

Financial Statements and Additional Information

    14   

This report on Form 6-K shall be deemed to be incorporated by reference in the registration statement on Form F-3 (No. 333-180880) of Telefonaktiebolaget LM Ericsson (publ.) and to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.

Ericsson FIRST QUARTER report, ADJUSTED for registration statement on Form F-3 (No. 333.180880)

April 25, 2012

   

Sales decreased -4% YoY, impacted by an expected major decline in CDMA sales as well as lower operator network spending in regions with macro-economic or political uncertainty. Global Services and consolidation of Telcordia contributed positively.

   

The underlying business mix, with higher share of coverage and network modernization projects than capacity projects, was unchanged. This mix is expected to prevail short-term.

   

Net income SEK 8.8 b. up 116% YoY, impacted by gain from Sony Ericsson divestment of SEK 7.7 b and loss in ST-Ericsson.

   

EPS diluted SEK 2.76 (1.27), driven by gain from Sony Ericsson divestment.

 

SEK b.

   Q1
2012
    Q1
2011
    YoY
Change
    Q4
2011
    QoQ
Change
 

Net sales

     51.0        53.0        -4     63.7        -20

Of which Networks

     27.3        33.2        -18     33.3        -18

Of which Global Services

     20.6        17.4        18     27.0        -24

Of which Support Solutions

     3.0        2.3        33     3.4        -11

Gross margin

     33.3     38.5     —          30.2     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income excl JVs

     10.5        6.3        67     4.1        159

Operating margin excl JVs

     20.6     11.9     —          6.4     —     

Of which Networks

     6     17     —          8     —     

Of which Global Services

     6     7     —          6     —     

Of which Support Solutions

     -1     -15     —          0     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income incl JVs

     9.1        5.8        56     2.2        321

Income after financial items

     9.1        5.8        56     1.8        396

Net income

     8.8        4.1        116     1.5        490
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EPS diluted, SEK

     2.76        1.27        117     0.36        667

Cash flow from operations

     0.7        -2.9        —          5.5        —     

Q112 includes a gain from the divestment of Sony Ericsson of SEK 7.7 b.

COMMENTS FROM HANS VESTBERG, PRESIDENT AND CEO

“Sales of high-performance mobile broadband developed well in North America, Japan and Korea, while other regions such as Europe including Russia, parts of Middle East and India were weaker,” says Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC). “CDMA continued its expected decline in the transition to LTE. Our services business showed continued momentum where especially Professional Services developed favorably. Support Solutions (former Multimedia) increased organic sales.

 

 

     1   


LOGO

 

NET SALES, SEK b.

LOGO

OPERATING INCOME INCL. JVs, SEK b.

LOGO

*excl SEK 7.7 b. gain from Sony Ericsson divestment

NET INCOME, SEK b.

LOGO

*excl SEK 7.7 b. gain from Sony Ericsson divestment

CASH FLOW FROM OPERATIONS, SEK b.

LOGO

In the quarter, we took important steps in our strategy execution. The announced acquisition of BelAir adds WiFi capabilities to our hetnet portfolio and by acquiring Technicolor’s Broadcast Services Division we have strengthened our position in media and broadcasting services, targeting a leadership position in Europe. With the completed divestment of Sony Ericsson, we have left the consumer part of the handset business in order to focus on enabling connectivity for all devices, handsets and beyond. Last year, we gained market share in our core businesses and continued to build a strong LTE position where we have more than 60% market share.

Late 2010, we took a strategic decision to increase our market share in Europe when operators started to modernize their networks and replacing old infrastructure with new multi-standard radio base stations. This, together with the business mix with more coverage than capacity projects, has, as expected, had a negative impact on gross margin YoY and is expected to prevail short-term.

Our joint venture ST-Ericsson has launched a revised strategy and actions to reduce its break-even point. We remain confident that ST-Ericsson has a strategic position in the industry to enable the device ecosystem,” concludes Vestberg.

Financial Highlights

INCOME STATEMENT AND CASH FLOW

Sales in the quarter were down -4% YoY and -20% QoQ. Telcordia’s sales were SEK 0.9 b. in the quarter. Revenue from Telcordia is split 50/50 between segments Global Services and Support Solutions. Q111 was positively impacted by a one-off revenue from the sale of patents of SEK 0.3 b.

Networks declined compared to Q111, impacted by continued business trends from H211 as well as a major decrease in CDMA sales. Global Services continued to show good momentum with a growth of 18% YoY, with especially good development in Professional Services. Global Services represented 40% (33%) of total sales in the quarter.

Restructuring charges amounted to SEK 0.6 (0.4) b. As previously communicated, restructuring charges are estimated to approximately SEK 4 b. for the FY12. Activities for increased efficiency are ongoing and expected to be executed evenly during the course of the year.

Gross margin was down YoY to 33.3% (38.5%), and up from 30.2% QoQ. The YoY decrease is due to increased services share, network modernization projects in Europe and a higher proportion of coverage projects. The QoQ improvement is due to seasonality, positive effects from mobile broadband capacity investments and lower Global Services share. The underlying business mix, with a higher share of coverage than capacity projects, including the European network modernization projects, was unchanged and is expected to prevail short-term.

Gradually in 2011, gross margin was negatively impacted by the strategic decision to increase market share in Europe and fully impacted Q411. Average project duration is expected to be 18-24 months.

 

 

Ericsson First Quarter Report 2012

     2   


LOGO

 

 

 

 

 

 

 

 

 

Total operating expenses, including impact from the consolidation of Telcordia, amounted to SEK 14.2 (14.4) b. R&D expenses amounted to SEK 8.0 (8.0) b. and declined QoQ from SEK 8.7 b. Selling and general administrative expenses (SG&A) amounted to SEK 6.2 (6.4) b., representing 12% of sales, same as in Q111. SG&A declined QoQ from SEK 6.8 b.

Other operating income and expenses includes a gain of SEK 7.7 b. related to the divestment of Sony Ericsson.

Ericsson’s share in ST-Ericsson’s income before tax was SEK -1.4 (-0.6) b.

Financial net amounted to SEK 0.0 (0.0) b and increased QoQ from SEK -0.3 b.

Net income improved to SEK 8.8 (4.1) b., due to the gain from divestment of Sony Ericsson.

EPS diluted was SEK 2.76 (1.27).

Cash flow from operations amounted to SEK 0.7 (-2.9) b., impacted by more projects. During the quarter, the Company made an employee contribution to pension trusts of SEK 1.0 b. Cash outlays for restructuring amounted to SEK 0.4 (0.8) b. Cash outlays of SEK 1.2 b. remain to be made.

 

 

Ericsson First Quarter Report 2012

     3   


LOGO

 

DAYS SALES

OUTSTANDING

LOGO

INVENTORY DAYS

LOGO

PAYABLE DAYS

LOGO

BALANCE SHEET AND OTHER PERFORMANCE INDICATORS

Trade receivables decreased QoQ to SEK 60.7 (64.5) b. Days sales outstanding (DSO) increased from 91 to 104 days QoQ due to the seasonally lower volumes.

Inventory decreased QoQ by SEK 0.5 b. to SEK 32.5 (33.1) b. Inventory turnover days increased from 78 to 88 days reflecting the higher share of projects. YoY, ITO increased slightly by one day.

Focus remains on improving working capital levels.

Goodwill increased SEK 3.8 b. to SEK 31.2 (27.4) b. due to acquisitions.

Cash, cash equivalents and short-term investments amounted to SEK 75.6 (80.5) b. The net effect on cash from divestment of Sony Ericsson, acquisitions of Telcordia and BelAir as well as increased share of LG-Ericsson was SEK -1.7 b.

During the quarter, approximately SEK 1.0 b. of provisions was utilized, of which SEK 0.4 b. related to restructuring. Additions of SEK 1.0 b. were made, of which SEK 0.3 b. related to restructuring. Reversals of SEK 0.4 b. were made.

Total number of employees at the end of the quarter increased to 108,551 (104,525). The total net addition is mainly related to the consolidation of Telcordia and expansion in the global service center in India.

 

 

Ericsson First Quarter Report 2012

     4   


LOGO

 

SEGMENT SALES,

SEK b.

 

LOGO

NETWORKS

QUATERLY SALES,

SEK b.

LOGO

Segment Results

NETWORKS

 

SEK b.

   Q1
2012
    Q1
2011
    YoY
Change
    Q4
2011
    QoQ
Change
 

Network sales

     27.3        33.2        -18     33.3        -18

Operating margin

     6     17     —          8     —     

In the quarter, business trends from H211 prevailed with cautious operator spending in regions with macro-economic or political uncertainty. QoQ sales were also impacted by seasonality. Sales in CDMA continued to decline and decreased -40% YoY. Demand for HSPA and LTE was good in the quarter, following the increased focus on network performance, especially in North America. India was still impacted by the uncertain regulatory environment and declined YoY and Russia continued its slower development from H211.

In the quarter, the 50th contract for Evolved Packet Core was signed. The Antenna Integrated radio, which is part of the RBS6000 family, is now ready for volume deployment. The number of people covered by commercial LTE networks from Ericsson is 215 million. In total, 325 million people are covered by LTE. The introduction of LTE also drives operators’ interest for investments in core and IMS. The IP application router SSR 8020 is now in commercial operation.

Operating margin was negatively impacted YoY by the underlying business mix with more coverage than capacity projects and the European network modernization projects as well as lower volumes. Profitability was negatively impacted QoQ by lower volumes, however, this was partly offset by mobile broadband capacity investments. This underlying business mix, with higher share of coverage and network modernization projects than capacity projects, is expected to prevail short-term. The impact on profitability from the network modernization projects in Europe is a result of the strategic decision in 2010 to increase market share in Europe. Efficiency activities are ongoing to mitigate these effects.

 

 

Ericsson First Quarter Report 2012

     5   


LOGO

 

GLOBAL SERVICES QUARTERLY SALES, SEK b.

 

LOGO

GLOBAL SERVICES

 

SEK b.

   Q1
2012
    Q1
2011
    YoY
Change
    Q4
2011
    QoQ
Change
 

Global Services sales

     20.6        17.4        18     27.0        -24

Of which Professional Services

     14.9        12.6        18     18.1        -18

Of which Managed Services

     5.7        4.9        16     6.0        -6

Of which Network Rollout

     5.7        4.9        18     8.9        -35
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating margin

     6     7     —          6     —     

Of which Professional Services

     13     12     —          14     —     

Of which Network Rollout

     -11     -7     —          -10     —     

Global Services continued its good momentum. The increase was especially good in Professional Services, mainly driven by consulting and systems integration. This growth is due to a number of reasons; the impact from growing data usage on our customers’ business, network and IT environments and increased operator focus on service quality. Operators’ transformation in the voice, IP and OSS/BSS domains in order to reduce OPEX are also driving growth. Also this quarter, Network Rollout sales increased YoY, driven by high volumes of network modernization in Europe and coverage projects in other regions. Managed Services continued its good momentum, reflecting the 23 new contracts signed in Q411.

Global Services operating margin decreased slightly YoY due to increased loss in Network Rollout. Profitability improved in Professional Services YoY, mainly due to continued work with efficiency. Network Rollout continued to be negatively impacted by the network modernization projects in Europe and coverage projects. The margin impact from restructuring charges was 2%-points Q112 for Global Services as well as Professional Services, compared to 1%-point in Q111.

Ericsson now supports networks with more than 2.5 billion subscribers.

 

Other information

   Q1
2012
     Full year
2011
 

No. of signed managed services contracts

     9         70   

Of which expansions/extensions

     4         32   

No. of signed significant consulting & systems integration contracts 1)

     6         33   

Number of subscribers in networks managed by Ericsson, end of period

     > 900 m.         900 m.   

Of which in network operations contracts

     500 m.         500 m.   

Number of Ericsson services professionals, end of period

     57,000         56,000   

 

1) 

In the areas of OSS/BSS, IP, Service Delivery Platforms and data center build projects.

 

 

Ericsson First Quarter Report 2012

     6   


LOGO

 

SUPPORT SOLUTIONS QUARTERLY SALES, SEK b.

 

LOGO

SUPPORT SOLUTIONS (PREVIOUSLY MULTIMEDIA)

 

SEK b.

   Q1
2012
    Q1
2011
    YoY
Change
    Q4
2011
    QoQ
Change
 

Support Solutions sales

     3.0        2.3        33     3.4        -11

Operating margin

     -1     -15     —          0     —     

Sales YoY was driven by good development in TV and multimedia brokering (IPX). The integration of Telcordia is proceeding as planned. Sales from the Telcordia operation are equally split between Support Solutions and Global Services. OSS was flat and BSS had a slow quarter, mainly related to a weaker development in India. Operating margins improved YoY due to increased volumes and cost efficiencies.

Number of subscribers served by our charging and billing solutions were 1.7 billion at end of period.

ST-ERICSSON

 

USD m.

   Q1
2012
     Q1
2011
     YoY
Change
    Q4
2011
     QoQ
Change
 

Net sales

     290         444         -35     409         -29

Operating income

     -326         -178         -83     -241         -35

Net income

     -312         -178         -75     -231         -35

ST-Ericsson’s sales decreased substantially as anticipated due to a drop in sales of new products to one of the largest customers, in addition to the usual seasonal effect and continued decline in legacy products. The net debt at the end of the quarter was USD -956 m. Last quarter net debt was USD -798 m. ST-Ericsson is reported in US GAAP and Ericsson’s share in ST-Ericsson’s income before tax, adjusted to IFRS, was SEK -1.4 (-0.6) b. in the quarter. By the end of the quarter, ST-Ericsson had utilized USD 978 m. of a short-term credit facility of USD 1.1 b. granted on a 50/50 basis by the parent companies.

On April 23, 2012, ST-Ericsson announced a new strategic direction with the key components; focused R&D portfolio to deliver world class modems and ModAp systems, partnership signed for application processors, additional measures to accelerate time-to-market and lower break-even point.

 

 

Ericsson First Quarter Report 2012

     7   


LOGO

 

Regional Overview

 

     First quarter 2012      Growth  

SEK b.

   Net-works      Global
Services
     Support
Solutions
     Total      YoY     QoQ  

North America

     7.5         4.7         0.6         12.8         -3     14

Latin America

     2.1         2.5         0.2         4.8         20     -31

Northern Europe and Central Asia

     1.2         1.0         0.1         2.3         -32     -39

Western and Central Europe

     1.5         2.6         0.2         4.3         -10     -18

Mediterranean

     2.0         2.4         0.2         4.6         -4     -44

Middle East

     1.3         1.7         0.2         3.2         3     -39

Sub-Saharan Africa

     1.3         0.8         0.2         2.2         -1     -32

India

     0.7         0.6         0.1         1.4         -55     -7

China and North East Asia

     6.3         2.8         0.1         9.2         6     -16

South East Asia and Oceania

     1.8         1.4         0.1         3.4         9     -16

Other

     1.7         0.1         1.0         2.9         9     -14
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

     27.3         20.6         3.0         51.0         -4     -20

Revenue from the acquired Telcordia business operation, consolidated January 2012, is reported 50/50 between segments Global Services and Support Solutions. In the regional dimension, all of the Telcordia sales is reported in the Support Solution segment except for North America where it is split 50/50 between Global Services and Support Solutions. Multimedia brokering (IPX) was previously reported in each region in segment Support Solution. As of Q112 it is part of region “Other” in segment Support Solutions.

North America. Strong HSPA capacity sales and a continued build-out of 4G/LTE coverage more than offset the major decline in CDMA sales. In 2011, the networks business had a strong H1, while sales for mobile infrastructure equipment slowed down in H2 after the initial period with high spending. Services sales increased YoY driven by market share gains and a high level of project executions. Smartphone penetration is now more than 50% in the US market.

Latin America. The YoY increase was driven by services, both network rollout and system integration in OSS/BSS. Sales in Networks showed some growth YoY due to investments in mobile broadband coverage, but also enhancements in 2G. Support Solutions increased due to consolidation of Telcordia.

Northern Europe and Central Asia. Sales of Networks showed a major decrease YoY mainly due to continued slower investments in Russia. LTE rollouts and network modernization projects continued in the Nordics. Global Services increased YoY, mainly related to new managed services contracts. The QoQ decline in Global Services is due to slower rollouts in Russia.

Western and Central Europe. Networks sales were impacted by cautious operator spending, partly offset by network modernization projects. New managed services business is driving the YoY growth in Global Services.

Mediterranean. Networks sales decreased YoY primarily due to cautious operator spending. Network modernization projects continued to be deployed. Global Services sales showed good development YoY, fueled by managed services contracts in Italy and systems integration in Spain.

Middle East. YoY growth was mainly driven by strong sales in Saudi Arabia while business was slower in Turkey. Political unrest is still impacting the region and operators are cautious with infrastructure investments. Services grew strongly, especially in managed services and systems integration as operators are looking into network performance quality and operational efficiencies.

Sub-Saharan Africa. Mobile penetration continued to grow and compared to other regions, build out of voice services (2G) is still the main driver of infrastructure projects. However, in some markets the deployment of mobile broadband has begun. Sales were down YoY despite growth in Networks.

 

 

Ericsson First Quarter Report 2012

     8   


LOGO

 

India. Regulatory uncertainty continued with Supreme Court ruling to revoke 122 2G licenses. In Q111, Networks sales were positively impacted by initial 3G rollouts. Operators have a strong focus on cost competitiveness, which has resulted in high interest in reducing their operating expenses. This has generated a growing managed services business. Strong QoQ growth in Support Solutions due to Telcordia consolidation.

China and North East Asia. The YoY increase is mainly related to continued data traffic growth in the region, especially in Japan and Korea. China had a YoY sales decline, primarily a result of good GSM deployments in H111. The QoQ sales decline is due to seasonality. The product mix is changing towards relatively more LTE coverage deployments in some key markets. The increase in Global Services YoY is mainly due to network rollout activities in China, Japan and Korea.

South East Asia and Oceania. Networks sales were positively impacted YoY by National Broadband Network (NBN) LTE deployment in Australia. In Bangladesh and Thailand, operators are planning for 3G spectrum progresses. Global Services showed good growth YoY, also due to the NBN LTE deployment.

Other. Licensing revenues showed stable development YoY. Also sales of cables, power modules and other businesses are included in “Other”. Multimedia brokering (IPX) was previously reported in each region, but from Q112 it is part of “Other”, under Support Solutions.

Market data

GROWTH RATES ARE BASED ON ERICSSON AND MARKET ESTIMATES

 

     Q1      Q1            FULL YEAR      Ericsson
forecast
 
   2012      2011      Change     2009      2010      2011      2012  

Mobile subscriptions, billion

     6.2         5.5         12     4.6         5.3         6.0         6.7   

Net additions, million

     170         190         -12     640         700         650         700   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Mobile broadband, million 1)

     1,100         710         61     360         620         1,000         1,400   

Net additions, million

     110         83         32     150         260         400         450   

 

1)

Mobile broadband includes handsets, tablets and mobile PCs for the following technologies: HSPA, LTE, CDMA2000 EV-DO, TD-SCDMA and WiMAX. Note: due to continuous improvements in reported data from operators, historical subscriptions figures might have changed compared to previously reported, affecting comparison of net additions and total figures. All figures are approximates.

Parent Company Information

Income after financial items was SEK 5.1 (3.1) b. During the quarter, Ericsson completed the divestment of its 50% share in Sony Ericsson. The divestment resulted in a gain of SEK 4.4 b. Other major changes in the Parent Company’s financial position for the quarter include; decreased cash, cash equivalents and short-term investments of SEK 4.2 b., increased current and non-current receivables from subsidiaries of SEK 7.3 b. and decreased current liabilities to subsidiaries of SEK 2.3 b. At the end of the quarter, cash, cash equivalents and short-term investments amounted to SEK 51.9 (56.1) b. By the end of the quarter, ST-Ericsson had utilized USD 489 million of a short-term credit facility.

In accordance with the conditions of the long-term variable compensation program (LTV) for Ericsson employees, 2,367,197 shares from treasury stock were sold or distributed to employees during the first quarter. The holding of treasury stock at March 31, 2012, was 60,479,306 Class B shares.

 

 

Ericsson First Quarter Report 2012

     9   


LOGO

 

Other Information

DIVESTMENT OF SONY ERICSSON COMPLETED

On February 16, 2012, Ericsson announced the completion of the divestment of its 50% stake in Sony Ericsson Mobile Communications to Sony. The agreed cash consideration for the transaction is EUR 1.05 billion. The deal includes a broad IP cross-licensing agreement.

ACQUISITION OF BELAIR

On February 21, 2012, Ericsson announced the intention to acquire 100% of North American carrier grade WiFi company BelAir Networks. The company is based in Canada and has approximately 120 employees.

ACQUISITION OF TECHNICOLOR’S BROADCAST SERVICES DIVISION

On March 13, 2012, Ericsson announced the submission of a binding offer to acquire the broadcast services division of Technicolor. The purchase price is EUR 19 million and a potential earn-out based on 2015 revenues of the broadcast services activity of up to EUR 9 million. The acquisition brings about 900 skilled employees and playout operations in France, UK and in the Netherlands. The closing of the acquisition is subject to relevant customary regulatory administrative approvals and consultations.

INCREASED OWNERSHIP IN LG-ERICSSON

On March 22, 2012, Ericsson announced it has acquired additional shares in LG-Ericsson and now holds 75% of the total shares. Before the purchase, Ericsson held 50% of the shares plus one share. LG-Ericsson is a joint venture between LG Electronics and Ericsson. LG-Ericsson is headquartered in Seoul, Republic of Korea. The joint venture is fully consolidated by Ericsson, since Ericsson acquired Nortel’s part of the company in July 2010.

ASSESSMENT OF RISK ENVIRONMENT

Ericsson’s operational and financial risk factors and uncertainties along with our strategies and tactics to mitigate risk exposures or limit unfavorable outcomes are described in our Annual Report 2011. Compared to the risks described in the Annual Report 2011, no material, new or changed risk factors or uncertainties have been identified in the quarter.

Risk factors and uncertainties in focus during the forthcoming nine-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 increased 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 of financing, 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 Support Solutions segment or variability in our overall sales seasonality could make it more difficult to forecast future sales;

 

 

Ericsson First Quarter Report 2012

     10   


LOGO

 

   

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;

 

   

Results and capital need of our major joint venture ST-Ericsson;

 

   

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. Stockholm, April 25, 2012

Telefonaktiebolaget LM Ericsson (publ)

Hans Vestberg, President and CEO

Date for next report: July 18, 2012

 

 

Ericsson First Quarter Report 2012

     11   


LOGO

 

Editor’s Note

Ericsson invites media, investors and analysts to a press conference at the Ericsson Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), April 25, 2012. An analysts, investors and media conference call will begin at 14.00 (CET).

For Further Information, Please Contact

Helena Norrman, Senior Vice President, Communications

Phone: +46 10 719 3472

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

 

INVESTORS    MEDIA

Åse Lindskog, Vice President,

Head of Investor and Analyst Relations

Phone: +46 10 719 9725

+46 730 244 872

E-mail: investor.relations@ericsson.com

  

Ola Rembe, Vice President,

Head of Corporate Public & Media Relations

Phone: +46 10 719 9727

+46 730 244 873

E-mail: media.relations@ericsson.com

Stefan Jelvin, Director,

Investor Relations

Phone: +46 10 714 2039

E-mail: investor.relations@ericsson.com

  

Corporate Public & Media Relations

Phone: +46 10 719 69 92

E-mail: media.relations@ericsson.com

Åsa Konnbjer, Director,

Investor Relations

Phone: +46 10 713 3928

E-mail: investor.relations@ericsson.com

  

Telefonaktiebolaget LM Ericsson (publ)

Org. number: 556016-0680

Torshamnsgatan 23

SE-164 83 Stockholm

Phone: +46 10 719 0000

www.ericsson.com

 

Rikard Tunedal, Director,

Investor Relations

Phone: +46 10 714 5400

E-mail: investor.relations@ericsson.com

  
 

 

Ericsson First Quarter Report 2012

     12   


LOGO

 

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 First Quarter Report 2012

     13   


LOGO

 

Financial Statements and Additional Information

 

Financial statements    Page  

Consolidated income statement and statement of comprehensive income

     15   

Consolidated balance sheet, of which regional inventory added

     16   

Consolidated statement of cash flows

     17   

Consolidated statement of changes in equity

     18   

Consolidated income statement—isolated quarters

     19   

Consolidated statement of cash flows—isolated quarters

     20   

Accounting policies

     21   

Net sales by segment by quarter

     22   

Operating income by segment by quarter

     23   

Operating margin by segment by quarter

     23   

Net sales by region by quarter

     24   

Net sales by region by quarter (cont.)

     25   

Top 5 countries in sales

     25   

Net sales by region by segment

     26   

Provisions

     27   

Number of employees

     27   

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

     27   

Other information,

     28   

Ericsson planning assumptions for year 2012

     28   

Restructuring charges by function

     29   

Restructuring charges by segment

     29   

Acquisition of Telcordia

     30   
 

 

Ericsson First Quarter Report 2012

     14   


CONSOLIDATED INCOME STATEMENT

 

SEK million

  Jan - Mar
2011
    2012     Change     Jan - Dec
2011
 

Net sales

    52,966        50,974        -4     226,921   

Cost of sales

    -32,578        -33,985        4     -147,200   
 

 

 

   

 

 

   

 

 

   

 

 

 

Gross income

    20,388        16,989        -17     79,721   

Gross margin (%)

    38.5     33.3       35.1

Research and development expenses

    -7,991        -8,016        0     -32,638   

Selling and administrative expenses

    -6,441        -6,232        -3     -26,683   
 

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

    -14,432        -14,248        -1     -59,321   

Other operating income and expenses1)

    343        7,749          1,278   
 

 

 

   

 

 

   

 

 

   

 

 

 

Operating income before shares in earnings of JV and associated companies

    6,299        10,490        67     21,678   

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

    11.9     20.6       9.6

Shares in earnings of JV and associated companies

    -468        -1,403        200     -3,778   
 

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    5,831        9,087        56     17,900   

Financial income

    302        262        -13     2,882   

Financial expenses

    -306        -273        -11     -2,661   
 

 

 

   

 

 

   

 

 

   

 

 

 

Income after financial items

    5,827        9,076        56     18,121   

Taxes

    -1,747        -272          -5,552   

Net income

    4,080        8,804        116     12,569   
 

 

 

   

 

 

     

 

 

 

Net income attributable to:

       

- Stockholders of the Parent Company

    4,103        8,950          12,194   

- Non-controlling interests

    -23        -146          375   

Other information

       

Average number of shares, basic (million)

    3,202        3,212          3,206   

Earnings per share, basic (SEK)2)

    1.28        2.79          3.80   

Earnings per share, diluted (SEK)2)

    1.27        2.76          3.77   

STATEMENT OF COMPREHENSIVE INCOME

 

SEK million

   Jan - Mar
2011
     2012      Jan - Dec
2011
 

Net income

     4,080         8,804         12,569   

Other comprehensive income

        

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

     388         436         -6,963   

Revaluation of other investments in shares and participations

        

Fair value remeasurement

     -1         —           —     

Cash flow hedges

        

Gains/losses arising during the period

     1,624         785         996   

Reclassification adjustments for gains/losses included in profit or loss

     -921         -213         -2,028   

Adjustments for amounts transferred to initial carrying amount of hedged items

     —           92         —     

Changes in cumulative translation adjustments

     -3,417         -2,004         -964   

Share of other comprehensive income on JV and associated companies

     -744         -52         -262   

Tax on items relating to components of other comprehensive income

     -222         -392         2,158   

Total other comprehensive income

     -3,293         -1,348         -7,063   
  

 

 

    

 

 

    

 

 

 

Total comprehensive income

     787         7,456         5,506   
  

 

 

    

 

 

    

 

 

 

Total comprehensive income attributable to:

        

Stockholders of the Parent Company

     906         7,650         5,081   

Non-controlling interests

     -119         -194         425   

 

1) 

Includes gain on sale of Sony Ericsson SEK 7,691 million in Q1 2012

2) 

Based on Net income attributable to stockholders of the parent Company

 

Ericsson First Quarter Report 2012, April 25 2012

     15   


CONSOLIDATED BALANCE SHEET

 

SEK million

   Dec 31
2011
     Mar 31
2012
 

ASSETS

     

Non-current assets

     

Intangible assets

     

Capitalized development expenses

     3,523         3,529   

Goodwill

     27,438         31,245   

Intellectual property rights, brands and other intangible assets

     13,083         17,263   

Property, plant and equipment

     10,788         11,268   

Financial assets

     

Equity in JV and associated companies

     5,965         3,271   

Other investments in shares and participations

     2,199         2,122   

Customer financing, non-current

     1,400         1,139   

Other financial assets, non-current

     4,117         5,747   

Deferred tax assets

     13,020         13,231   
  

 

 

    

 

 

 
     81,533         88,815   

Current assets

     

Inventories

     33,070         32,546   

Trade receivables

     64,522         60,695   

Customer financing, current

     2,845         2,798   

Other current receivables

     17,837         20,333   

Short-term investments 1)

     41,866         44,992   

Cash and cash equivalents

     38,676         30,638   
  

 

 

    

 

 

 
     198,816         192,002   

Total assets

     280,349         280,817   
  

 

 

    

 

 

 

EQUITY AND LIABILITIES

     

Equity

     

Stockholders’ equity

     143,105         150,506   

Non-controlling interest in equity of subsidiaries

     2,165         1,962   
  

 

 

    

 

 

 
     145,270         152,468   

Non-current liabilities

     

Post-employment benefits

     10,016         9,339   

Provisions, non-current

     280         208   

Deferred tax liabilities

     2,250         3,749   

Borrowings, non-current

     23,256         22,969   

Other non-current liabilities

     2,248         2,590   
  

 

 

    

 

 

 
     38,050         38,855   

Current liabilities

     

Provisions, current

     5,985         5,722   

Borrowings, current

     7,765         6,229   

Trade payables

     25,309         22,283   

Other current liabilities

     57,970         55,260   
  

 

 

    

 

 

 
     97,029         89,494   

Total equity and liabilities

     280,349         280,817   
  

 

 

    

 

 

 

Of which interest-bearing liabilities and post-employment benefits

     41,037         38,537   

Of which net cash

     39,505         37,093   

Assets pledged as collateral

     452         403   

Contingent liabilities

     609         581   

 

1) 

Including loan to ST-Ericsson of SEK 3,241 (2,759) million

 

Ericsson First Quarter Report 2012, April 25 2012

     16   


CONSOLIDATED STATEMENT OF CASH FLOWS

 

SEK million

   Jan - Mar
2011
     2012      Jan - Dec
2011
 

Operating activities

        

Net income

     4,080         8,804         12,569   

Adjustments to reconcile net income to cash

        

Taxes

     721         -1,118         1,994   

Earnings/dividends in JV and associated companies

     452         1,290         3,710   

Depreciation, amortization and impairment losses

     2,209         2,315         9,036   

Other

     -1,201         -7,022         -2,127   
  

 

 

    

 

 

    

 

 

 
     6,261         4,269         25,182   

Changes in operating net assets

        

Inventories

     -3,462         -59         -3,243   

Customer financing, current and non-current

     196         282         74   

Trade receivables

     -1,610         3,722         -1,700   

Trade payables

     -255         -2,713         -1,648   

Provisions and post-employment benefits

     -752         -1,771         -5,695   

Other operating assets and liabilities, net

     -3,284         -2,999         -2,988   
  

 

 

    

 

 

    

 

 

 
     -9,167         -3,538         -15,200   

Cash flow from operating activities

     -2,906         731         9,982   

Investing activities

        

Investments in property, plant and equipment

     -980         -1,648         -4,994   

Sales of property, plant and equipment

     97         309         386   

Acquisitions/divestments of subsidiaries and other operations, net1)

     -455         -1,730         -3,128   

Product development

     -269         -251         -1,515   

Other investing activities

     179         195         -900   

Short-term investments

     3,706         -3,999         14,692   
  

 

 

    

 

 

    

 

 

 

Cash flow from investing activities

     2,278         -7,124         4,541   

Cash flow before financing activities

     -628         -6,393         14,523   

Financing activities

        

Dividends paid

     —           —           -7,455   

Other financing activities

     1,240         -1,318         961   
  

 

 

    

 

 

    

 

 

 

Cash flow from financing activities

     1,240         -1,318         -6,494   

Effect of exchange rate changes on cash

     -720         -327         -217   

Net change in cash

     -108         -8,038         7,812   

Cash and cash equivalents, beginning of period

     30,864         38,676         30,864   

Cash and cash equivalents, end of period

     30,756         30,638         38,676   

 

1) 

Includes payment of external loan of SEK -6.2 b. attibutable to the acquisition of Telcordia in Q1 2012

 

Ericsson First Quarter Report 2012, April 25 2012

     17   


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

SEK million

   Jan - Mar
2011
     Jan - Mar
2012
     Jan - Dec
2011
 
Opening balance      146,785         145,270         146,785   

Total comprehensive income

     787         7,456         5,506   

Sale/Repurchase of own shares

     23         17         92   

Stock purchase

     107         108         413   

Dividends paid

     —           —           -7,455   

Transactions with non-controlling interests

     —           -384         -71   
  

 

 

    

 

 

    

 

 

 
Closing balance      147,702         152,467         145,270   
  

 

 

    

 

 

    

 

 

 

 

Ericsson First Quarter Report 2012, April 25 2012

     18   


CONSOLIDATED INCOME STATEMENT – ISOLATED QUARTERS

 

    

2011

     2012  

Isolated quarters, SEK million

   Q1      Q2      Q3      Q4      Q1  

Net sales

     52,966         54,770         55,518         63,667         50,974   

Cost of sales

     -32,578         -34,064         -36,095         -44,463         -33,985   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Gross income

     20,388         20,706         19,423         19,204         16,989   

Gross margin (%)

     38.5%         37.8%         35.0%         30.2%         33.3%   

Research and development expenses

     -7,991         -8,108         -7,824         -8,715         -8,016   

Selling and administrative expenses

     -6,441         -7,741         -5,664         -6,837         -6,232   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Operating expenses

     -14,432         -15,849         -13,488         -15,552         -14,248   

Other operating income and expenses 1)

     343         166         366         403         7,749   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Operating income before shares in earnings of JV and associated companies

     6,299         5,023         6,301         4,055         10,490   

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

     11.9%         9.2%         11.3%         6.4%         20.6%   

Shares in earnings of JV and associated companies

     -468         -771         -640         -1,899         -1,403   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     5,831         4,252         5,661         2,156         9,087   

Financial income

     302         977         1,198         405         262   

Financial expenses

     -306         -636         -987         -732         -273   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Income after financial items

     5,827         4,593         5,872         1,829         9,076   

Taxes

     -1,747         -1,377         -2,090         -338         -272   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income

     4,080         3,216         3,782         1,491         8,804   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income attributable to:

              

- Stockholders of the Parent Company

     4,103         3,116         3,821         1,154         8,950   

- Non-controlling interests

     -23         100         -39         337         -146   

Other information

              

Average number of shares, basic (million)

     3,202         3,204         3,207         3,209         3,212   

Earnings per share, basic (SEK)2)

     1.28         0.97         1.19         0.36         2.79   

Earnings per share, diluted (SEK)2)

     1.27         0.96         1.18         0.36         2.76   

 

1) 

Includes gain on sale of Sony Ericsson SEK 7,691 million in Q1 2012

2) 

Based on Net income attributable to stockholders of the Parent Company

 

Ericsson First Quarter Report 2012, April 25 2012

     19   


CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

 

    

2011

     2012  

Isolated quarters, SEK million

   Q1      Q2      Q3      Q4      Q1  

Operating activities

              

Net income

     4,080         3,216         3,782         1,491         8,804   

Adjustments to reconcile net income to cash

              

Taxes

     721         -29         550         752         -1,118   

Earnings/dividends in JV and associated companies

     452         783         658         1,817         1,290   

Depreciation, amortization and impairment losses

     2,209         2,172         2,227         2,428         2,315   

Other

     -1,201         -1,107         -291         472         -7,022   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     6,261         5,035         6,926         6,960         4,269   

Changes in operating net assets

              

Inventories

     -3,462         -2,370         -2,619         5,208         -59   

Customer financing, current and non-current

     196         195         -607         290         282   

Trade receivables

     -1,610         2,114         -2,769         565         3,722   

Trade payables

     -255         -834         -805         246         -2,713   

Provisions and post-employment benefits

     -752         -485         -2,180         -2,278         -1,771   

Other operating assets and liabilities, net

     -3,284         2,126         3,694         -5,524         -2,999   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     -9,167         746         -5,286         -1,493         -3,538   

Cash flow from operating activities

     -2,906         5,781         1,640         5,467         731   

Investing activities

              

Investments in property, plant and equipment

     -980         -1,196         -1,294         -1,524         -1,648   

Sales of property, plant and equipment

     97         58         59         172         309   

Acquisitions/divestments of subsidiaries and other operations, net 1)

     -455         -507         -1,931         -235         -1,730   

Product development

     -269         -429         -257         -560         -251   

Other investing activities

     179         -100         -769         -210         195   

Short-term investments

     3,706         3,196         9,323         -1,533         -3,999   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cash flow from investing activities

     2,278         1,022         5,131         -3,890         -7,124   

Cash flow before financing activities

     -628         6,803         6,771         1,577         -6,393   

Financing activities

              

Dividends paid

     —           -7,209         -241         -5         —     

Other financing activities

     1,240         -1,097         -10         828         -1,318   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cash flow from financing activities

     1,240         -8,306         -251         823         -1,318   

Effect of exchange rate changes on cash

     -720         211         278         14         -327   

Net change in cash

     -108         -1,292         6,798         2,414         -8,038   

Cash and cash equivalents, beginning of period

     30,864         30,756         29,464         36,262         38,676   

Cash and cash equivalents, end of period

     30,756         29,464         36,262         38,676         30,638   

 

1) 

Includes payment of external loan of SEK -6.2 b. attibutable to the acquisition of Telcordia in Q1 2012

 

Ericsson First Quarter Report 2012, April 25 2012

     20   


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, (IFRIC). The accounting policies adopted are consistent with those of the annual report for the year ended December 31, 2011, and should be read in conjunction with that annual report.

As from January 1, 2012, the Company has applied the following new or amended IFRSs and IFRICs:

 

 

Amendment to IAS 12, income taxes: on deferred tax: recovery of underlying assets (not yet endorsed by the EU)

 

 

Amendments to IFRS 7, Financial instruments Disclosures: Transfers of Financial Assets

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 March 31, 2012 and IFRS as endorsed by the EU, except for IAS 12 above.

 

Ericsson First Quarter Report 2012, April 25 2012

     21   


NET SALES BY SEGMENT BY QUARTER

Segments Sony Ericsson and ST-Ericsson are reported in accordance with the equity method, thus their sales are not included.

 

    

2011

    2012  

Isolated quarters, SEK million

   Q1     Q2     Q3     Q4     Q1  

Networks

     33,249        33,360        32,506        33,280        27,314   

Global Services

     17,435        19,036        20,438        26,975        20,631   

Of which Professional Services

     12,571        13,463        14,719        18,081        14,884   

Of which Managed Services

     4,924        4,724        5,304        6,046        5,708   

Of which Network Rollout

     4,864        5,573        5,719        8,894        5,747   

Support Solutions

     2,282        2,374        2,574        3,412        3,029   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     52,966        54,770        55,518        63,667        50,974   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    

2011

    2012  

Sequential change, percent

   Q1     Q2     Q3     Q4     Q1  

Networks

     -9%        0%        -3%        2%        -18%   

Global Services

     -24%        9%        7%        32%        -24%   

Of which Professional Services

     -25%        7%        9%        23%        -18%   

Of which Managed Services

     -8%        -4%        12%        14%        -6%   

Of which Network Rollout

     -21%        15%        3%        56%        -35%   

Support Solutions

     -34%        4%        8%        33%        -11%   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     -16%        3%        1%        15%        -20%   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    

2011

    2012  

Year over year change, percent

   Q1     Q2     Q3     Q4     Q1  

Networks

     35%        31%        25%        -9%        -18%   

Global Services

     -4%        -5%        7%        18%        18%   

Of which Professional Services

     -5%        -9%        7%        8%        18%   

Of which Managed Services

     1%        -16%        1%        13%        16%   

Of which Network Rollout

     0%        6%        7%        44%        18%   

Support Solutions

     -1%        -2%        11%        -2%        33%   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     17%        14%        17%        1%        -4%   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    

2011

    2012  

Year to date, SEK million

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

Networks

     33,249        66,609        99,115        132,395        27,314   

Global Services

     17,435        36,471        56,909        83,884        20,631   

Of which Professional Services

     12,571        26,034        40,753        58,834        14,884   

Of which Managed Services

     4,924        9,648        14,952        20,998        5,708   

Of which Network Rollout

     4,864        10,437        16,156        25,050        5,747   

Support Solutions

     2,282        4,656        7,230        10,642        3,029   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     52,966        107,736        163,254        226,921        50,974   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Year to date,   

2011

    2012  

year over year change, percent

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

Networks

     35     33     30     17     -18

Global Services

     -4     -4     -1     5     18

Of which Professional Services

     -5     -7     -3     1     18

Of which Managed Services

     1     -8     -5     -1     16

Of which Network Rollout

     0     3     5     16     18

Support Solutions

     -1     -2     3     1     33
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     17     16     16     12     -4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Ericsson First Quarter Report 2012, April 25 2012

     22   


OPERATING INCOME BY SEGMENT BY QUARTER

 

    

2011

    2012  

Isolated quarters, SEK million

   Q1     Q2     Q3     Q4     Q1  

Networks

     5,744        4,599        4,277        2,675        1,649   

Global Services

     1,146        1,030        1,757        1,611        1,267   

Of which Professional Services

     1,486        1,661        2,023        2,498        1,908   

Of which Network Rollout

     -340        -631        -266        -887        -641   

Support Solutions

     -338        -267        90        11        -28   

Unallocated 1)

     -228        -204        164        -233        -97   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal Segments excluding Sony Ericsson and ST-Ericsson

     6,324        5,158        6,288        4,064        2,791   

Sony Ericsson 2)

     71        -208        75        -1,137        7,691   

ST-Ericsson

     -564        -698        -702        -771        -1,395   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal Sony Ericsson and ST-Ericsson

     -493        -906        -627        -1,908        6,296   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     5,831        4,252        5,661        2,156        9,087   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    

2011

    2012  

Year to date, SEK million

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

Networks

     5,744        10,343        14,620        17,295        1,649   

Global Services

     1,146        2,176        3,933        5,544        1,267   

Of which Professional Services

     1,486        3,147        5,170        7,668        1,908   

Of which Network Rollout

     -340        -971        -1,237        -2,124        -641   

Support Solutions

     -338        -605        -515        -504        -28   

Unallocated 1)

     -228        -432        -268        -501        -97   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal Segments excluding Sony Ericsson and ST-Ericsson

     6,324        11,482        17,770        21,834        2,791   

Sony Ericsson 2)

     71        -137        -62        -1,199        7,691   

ST-Ericsson

     -564        -1,262        -1,964        -2,735        -1,395   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal Sony Ericsson and ST-Ericsson

     -493        -1,399        -2,026        -3,934        6,296   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     5,831        10,083        15,744        17,900        9,087   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING MARGIN BY SEGMENT BY QUARTER

          
As percentage of net sales,   

2011

    2012  

isolated quarters

   Q1     Q2     Q3     Q4     Q1  

Networks

     17     14     13     8     6

Global Services

     7     5     9     6     6

Of which Professional Services

     12     12     14     14     13

Of which Network Rollout

     -7     -11     -5     -10     -11

Support Solutions

     -15     -11     3     0     -1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal excluding Sony Ericsson and ST-Ericsson

     12     9     11     6     5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
As percentage of net sales,   

2011

    2012  

Year to date

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

Networks

     17     16     15     13     6

Global Services

     7     6     7     7     6

Of which Professional Services

     12     12     13     13     13

Of which Network Rollout

     -7     -9     -8     -8     -11

Support Solutions

     -15     -13     -7     -5     -1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal excluding Sony Ericsson and ST-Ericsson

     12     11     11     10     5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

1) 

“Unallocated” consists mainly of costs for corporate staff. Non-operational capital gains and losses

2) 

Gain on sale of Sony Ericsson in SEK 7,691 million in Q1 2012

 

Ericsson First Quarter Report 2012, April 25 2012

     23   


NET SALES BY REGION BY QUARTER

 

           2011                 2012  

Isolated quarters, SEK million

   Q1     Q2     Q3     Q4     Q1  

North America

     13,162        12,324        12,096        11,203        12,775   

Latin America

     4,015        4,927        6,012        7,028        4,822   

Northern Europe & Central Asia 1) 2)

     3,365        4,552        3,527        3,781        2,292   

Western & Central Europe 2)

     4,806        4,342        4,612        5,270        4,306   

Mediterranean2)

     4,799        5,543        5,225        8,240        4,620   

Middle East

     3,070        3,546        3,650        5,195        3,157   

Sub Saharan Africa

     2,212        2,214        2,519        3,218        2,200   

India

     3,169        2,798        2,273        1,522        1,421   

China & North East Asia

     8,633        9,025        9,662        10,889        9,154   

South East Asia & Oceania

     3,108        3,033        3,720        4,009        3,374   

Other 1)2)

     2,627        2,466        2,222        3,312        2,853   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     52,966        54,770        55,518        63,667        50,974   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

1) Of which Sweden

     927        1,103        944        908        834   

2) Of which EU

     10,020        10,317        10,195        13,428        9,502   
           2011                 2012  

Sequential change, percent

   Q1     Q2     Q3     Q4     Q1  

North America

     -6     -6     -2     -7     14

Latin America

     -34     23     22     17     -31

Northern Europe & Central Asia 1) 2)

     -30     35     -23     7     -39

Western & Central Europe 2)

     -19     -10     6     14     -18

Mediterranean 2)

     -31     16     -6     58     -44

Middle East

     -34     16     3     42     -39

Sub Saharan Africa

     9     0     14     28     -32

India

     11     -12     -19     -33     -7

China & North East Asia

     -9     5     7     13     -16

South East Asia & Oceania

     -21     -2     23     8     -16

Other 1)2)

     25     -6     -10     49     -14
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     -16     3     1     15     -20
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

1) Of which Sweden

     -21     19     -14     -4     -8

2) Of which EU

     -20     3     -1     32     -29
           2011                 2012  

Year-over-year change, percent

   Q1     Q2     Q3     Q4     Q1  

North America

     39     -6     -6     -20     -3

Latin America

     1     17     64     16     20

Northern Europe & Central Asia 1) 2)

     46     70     49     -22     -32

Western & Central Europe 2)

     -8     -2     7     -11     -10

Mediterranean 2)

     -5     -2     4     19     -4

Middle East

     -22     -7     34     12     3

Sub Saharan Africa

     -9     -25     40     59     -1

India

     38     107     7     -46     -55

China & North East Asia

     74     96     39     15     6

South East Asia & Oceania

     -12     -17     -3     2     9

Other 1) 2)

     37     49     19     57     9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     17     14     17     1     -4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

1) Of which Sweden

     -11     11     -8     -22     -10

2) Of which EU

     -9     -1     5     7     -5

 

Ericsson First Quarter Report 2012, April 25 2012

     24   


NET SALES BY REGION BY QUARTER (continued)

 

           2011           2012  

Year to date, SEK million

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

North America

     13,162        25,486        37,582        48,785        12,775   

Latin America

     4,015        8,942        14,954        21,982        4,822   

Northern Europe & Central Asia 1)2)

     3,365        7,917        11,444        15,225        2,292   

Western & Central Europe 2)

     4,806        9,148        13,760        19,030        4,306   

Mediterranean2)

     4,799        10,342        15,567        23,807        4,620   

Middle East

     3,070        6,616        10,266        15,461        3,157   

Sub Saharan Africa

     2,212        4,426        6,945        10,163        2,200   

India

     3,169        5,967        8,240        9,762        1,421   

China & North EastAsia

     8,633        17,658        27,320        38,209        9,154   

South East Asia & Oceania

     3,108        6,141        9,861        13,870        3,374   

Other 1)2)

     2,627        5,093        7,315        10,627        2,853   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     52,966        107,736        163,254        226,921        50,974   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

1) Of which Sweden

     927        2,030        2,974        3,882        834   

2) Of which EU

     10,020        20,337        30,532        43,960        9,502   
Year to date,          2011           2012  

year-over-year change, percent

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

North America

     39     13     6     -1     -3

Latin America

     1     10     26     23     20

Northern Europe & Central Asia1)2)

     46     59     56     25     -32

Western & Central Europe2)

     -8     -5     -1     -4     -10

Mediterranean2)

     -5     -3     -1     5     -4

Middle East

     -22     -15     -2     2     3

Sub Saharan Africa

     -9     -18     -3     11     -1

India

     38     63     42     13     -55

China & North East Asia

     74     85     66     47     6

South East Asia & Oceania

     -12     -14     -10     -7     9

Other1)2)

     37     43     35     41     9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     17     16     16     12     -4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

1) Of which Sweden

     -11     -1     -3     -8     -10

2) Of which EU

     -9     -5     -2     1     -5
TOP 5 COUNTRIES IN SALES           
                       Jan-Mar     Jan-Mar  

Country

                     2011     2012  

United States

           24     24

Japan

           8     9

China

           6     5

Korea, Republic of

           3     4

Italy

           3     3

 

Ericsson First Quarter Report 2012, April 25 2012

     25   


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.

Revenue from Telcordia is reported 50/50 between Segments Global Services and Support Solutions. In the regional dimension, all of Telcordia sales is reported in Support Solutions, except for North America where it is split 50/50. Multimedia brokering (IPX) was previously reported in each region in Segment Support Solutions, from Q112 it is part of region “Other” in Segment Support Solutions.

 

           Q1, SEK million           Accumulated Jan -Mar 2012, SEK million  

Isolated quarter

2012

   Net-
works
    Global
Services
    Support
Solutions
    Total     Net-
works
    Global
Services
    Support
Solutions
    Total  

North America

     7,485        4,702        588        12,775        7,485        4,702        588        12,775   

Latin America

     2,064        2,524        234        4,822        2,064        2,524        234        4,822   

Northern Europe & Central Asia

     1,192        1,020        80        2,292        1,192        1,020        80        2,292   

Western & Central Europe

     1,535        2,576        195        4,306        1,535        2,576        195        4,306   

Mediterranean

     2,026        2,424        170        4,620        2,026        2,424        170        4,620   

Middle East

     1,317        1,652        188        3,157        1,317        1,652        188        3,157   

Sub Saharan Africa

     1,257        793        150        2,200        1,257        793        150        2,200   

India

     660        623        138        1,421        660        623        138        1,421   

China & North East Asia

     6,280        2,752        122        9,154        6,280        2,752        122        9,154   

South East Asia & Oceania

     1,820        1,418        136        3,374        1,820        1,418        136        3,374   

Other

     1,678        147        1,028        2,853        1,678        147        1,028        2,853   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     27,314        20,631        3,029        50,974        27,314        20,631        3,029        50,974   

Share of Total

     54     40     6     100     54     40     6     100
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

           Q1 2012        

Sequential change, percent

   Net-
works
    Global
Services
    Support
Solutions
    Total  

North America

     49     -18     29     14

Latin America

     -37     -26     -27     -31

Northern Europe & Central Asia

     -26     -50     -38     -39

Western & Central Europe

     -28     -10     -33     -18

Mediterranean

     -46     -39     -68     -44

Middle East

     -45     -28     -62     -39

Sub Saharan Africa

     -34     -26     -36     -32

India

     2     -23     116     -7

China & North East Asia

     -15     -17     -47     -16

South East Asia & Oceania

     -17     -12     -36     -16

Other

     -44     -201     129     -14
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     -18     -24     -11     -20
  

 

 

   

 

 

   

 

 

   

 

 

 
           Q1 2012        

Year over year change, percent

   Net-
works
    Global
Services
    Support
Solutions
    Total  

North America

     -18     22     137     -3

Latin America

     3     40     10     20

Northern Europe & Central Asia

     -50     22     -37     -32

Western & Central Europe

     -29     6     -11     -10

Mediterranean

     -10     7     -39     -4

Middle East

     -21     29     48     3

Sub Saharan Africa

     5     -6     -14     -1

India

     -71     -12     -23     -55

China & North East Asia

     -3     34     9     6

South East Asia & Oceania

     6     16     -15     9

Other

     -17     -13     134     9
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     -18     18     33     -4
  

 

 

   

 

 

   

 

 

   

 

 

 
           Jan - Mar 2012        

Year over year change, percent

   Net-
works
    Global
Services
    Support
Solutions
    Total  

North America

     -18     22     137     -3

Latin America

     3     40     10     20

Northern Europe & Central Asia

     -50     22     -37     -32

Western & Central Europe

     -29     6     -11     -10

Mediterranean

     -10     7     -39     -4

Middle East

     -21     29     48     3

Sub Saharan Africa

     5     -6     -14     -1

India

     -71     -12     -23     -55

China & North East Asia

     -3     34     9     6

South East Asia & Oceania

     6     16     -15     9

Other

     -17     -13     134     9
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     -18     18     33     -4
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Ericsson First Quarter Report 2012, April 25 2012

     26   


PROVISIONS

 

     2011      2012  

Isolated quarters, SEK million

   Q1      Q2      Q3      Q4      Q1  

Opening balance

     9,744         9,529         9,335         8,065         6,265   

Additions

     1,304         2,032         633         838         1,003   

Utilization/Cash out

     -1,091         -1,908         -1,464         -1,524         -980   

Of which restructuring

     -762         -1,220         -747         -494         -401   

Reversal of excess amounts

     -88         -451         -556         -824         -370   

Reclassification, translation difference and other

     -340         133         117         -290         12   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Closing balance

     9,529         9,335         8,065         6,265         5,930   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
            2011            

2012

 

Year to date, SEK million

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

Opening balance

     9,744         9,744         9,744         9,744         6,265   

Additions

     1,304         3,336         3,969         4,807         1,003   

Utilization/Cash out

     -1,091