Edgar Filing: ERICSSON LM TELEPHONE CO

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 27, 2011

LM ERICSSON TELEPHONE COMPANY

(Translation of registrant’s name into English)

Torshamnsgatan 23, Kista

SE-164 83, Stockholm, Sweden

(Address of principal executive offices)

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

Form 20-F x Form 40-F ¨

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

Yes ¨ No x

Announcement of LM Ericsson Telephone Company, dated April 27. 2011 regarding “ERICSSON REPORTS FIRST QUARTER RESULTS”

LOGO

FIRST QUARTER REPORT

April 27, 2011

ERICSSON REPORTS FIRST QUARTER RESULTS


	First quarter									Fourth quarter
SEK b.	2011¹⁾			2010²⁾			Change			2010²⁾			Change
Net sales		53.0			45.1			17	%		62.8			-16	%
Gross margin		38.5	%		38.5	%		—			36.6	%		—
EBITA margin excl JVs		14.1	%		12.8	%		—			15.3	%		—
Operating income excl JVs		6.3			4.5			39	%		8.4			-25	%
Operating margin excl JVs		11.9	%		10.1	%		—			13.4	%		—
Ericsson’s share in earnings in JVs		-0.5			-0.3			—			-0.3			—
Income after financial items		5.8			4.1			41	%		7.8			-26	%
Net income		4.1			1.3			220	%		4.4			-7	%
EPS diluted, SEK		1.27			0.39			—			1.34			—
EPS diluted, excl. amortizations and write-downs of acquired intangibles, SEK		1.52			0.87			75	%		1.65			-8	%
Adjusted operating cash flow³⁾		-2.1			3.0			—			16.2			—
Cash flow from operations		-2.9			2.3			—			15.2			—

¹⁾	All numbers for 2011 are stated incl. restructuring charges

²⁾	All numbers for 2010, excl. EPS, Net income and Cash flow from operations, are stated excl. restructuring charges. For details see section on restructuring under Financial Statements and Additional Information

³⁾	Cash flow from operations excl. restructuring cash outlays that have been provided for

“Group sales in the quarter increased by 17% year-over-year driven by continued strong demand for mobile broadband and especially for the multi-standard radio base station RBS 6000,” says Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC). “Sales for comparable units, adjusted for currency and hedging, increased 25% year-over-year. Net income improved from SEK 1.3 b to SEK 4.1 b. mainly related to increased profitability in segment Networks. Cash flow in the quarter amounted to SEK -2.9 (2.3) b. impacted by higher level of work in progress in the regions and continued ramp up of production.

The increase in Group sales was driven by segment Networks where revenues grew 35% year-over-year with an EBITA margin of 20%. The strong demand for mobile broadband resulted in five out of ten regions showing growth year-over-year. Countries with especially strong growth were the US, India, Japan, Korea and Russia. China had continued good momentum for 2G.

Segment Global Services sales decreased -4% year-over-year primarily due to currency exchange rate effects. In local currencies Professional Services grew 3%. EBITA margin decreased to 7% in the quarter mainly due to lower profitability in Network Rollout. Managed Services was flat compared to the first quarter 2010, but grew 11% year-over-year in local currencies driven by a number of new smaller contracts. Segment Multimedia sales were flat year-over-year while EBITA margin dropped to -7%, mainly due to product mix. Our joint ventures showed mixed performance. Sony Ericsson contributed with a profit before tax of SEK 0.1 b. while ST-Ericsson’s loss amounted to SEK -0.6 b.

Sales in the first quarter were not impacted by the devastating earthquake and tsunami in Japan. Our global supply chain of components is partly dependent on Japan and we estimate delays in delivery of certain products. We have taken a number of actions to mitigate the effects to secure that we limit the impact on our customers. These activities include finding and integrating alternative components in our products as well as increasing volumes with second source suppliers. Effects will also depend on Japan’s overall recovery but our best estimate is that we will be able to deliver the majority of these volumes before end of third quarter 2011.

During 2010 we continued to gain market shares in 3G and at least maintained our market shares in 4G/LTE of more than 50%. While GSM will continue to exist for many years, we will see the bulk of investments shifting to 3G/WCDMA and 4G/LTE. In services we increased the market share and we continue to be the leading provider in the industry,” concludes Hans Vestberg.

FINANCIAL HIGHLIGHTS

Income statement and cash flow

Sales in the quarter amounted to SEK 53.0 (45.1) b., up 17% year-over-year and down -16% sequentially.

Sales for comparable units, adjusted for currency exchange rate effects and hedging, increased 25% year-over-year.

A one-off revenue from the sale of patents of SEK 0.3 b. positively impacted sales and margins in the first quarter. Reported numbers for the first quarter 2010 exclude restructuring charges of SEK 2.2 b., while reported numbers for the first quarter 2011 include restructuring charges of SEK 0.4 b.

Gross margin in the quarter was flat year-over-year at 38.5% (38.5%), and was up from 36.6% sequentially. The business mix from second half of 2010, with expansions and upgrades, has prevailed in the quarter. This, in combination with strong sales in segment Networks and continued efficiency gains, have impacted gross margin positively.

3G volumes in India were high, which affected margins negatively. The negative margin effects from network modernization projects, which we indicated in the fourth quarter 2010, have partly materialized in the quarter.

R&D expenses amounted to SEK 8.0 (7.3) b., an increase by 10% year-over-year. The increase is a result of the planned higher investments in radio, such as TD-LTE and IP as well as the acquired LG-Ericsson operations. Selling and general administrative expenses (SG&A) amounted to SEK 6.4 (5.9) b., an increase by 10% year-over-year, representing 12% of sales. This is mainly a result of the acquired LG-Ericsson operations and a growing number of LTE trials. Total operating expenses amounted to SEK 14.4 (13.1) b.

Other operating income and expenses were flat, SEK 0.3 (0.3) b. in the quarter.

SALES BY QUARTER

2010 AND 2011 (SEK B)

LOGO

Operating income, excluding joint ventures, increased 39% to SEK 6.3 (4.5) b. in the quarter. Operating margin improved to 11.9% (10.1%) year-over-year mainly due to the volume increase.

Ericsson’s share in earnings of joint ventures, before tax, amounted to SEK -0.5 (-0.3) b., compared to SEK -0.3 b. in the fourth quarter 2010. Sony Ericsson contributed with a profit of SEK 0.1 b. while ST-Ericsson’s loss amounted to SEK -0.6 b.

Financial net amounted to SEK 0.0 (-0.2) b. in the quarter. Financial net improved slightly sequentially from SEK -0.3 b. due to higher short-term interest rates and a high cash position.

Net income amounted to SEK 4.1 (1.3) b. The improvements are mainly a result of increased sales volumes and improved profitability in Networks.

Earnings per share were SEK 1.27 (0.39) in the quarter. Earnings per share excluding amortizations and write-downs of acquired intangibles were SEK 1.52 (0.87) in the first quarter.

Adjusted operating cash flow was SEK -2.1 (3.0) b. in the quarter. Cash flow from operations amounted to SEK -2.9 (2.3) b. mainly due to higher inventories and a payment of SEK 1.1 (0.9) b. to pension funds. Cash outlays for restructuring amounted to SEK 0.8 (0.7) b. in the quarter. Cash outlays of SEK 2.5 b. remain to be made.


Ericsson First Quarter Report 2011		2

Balance sheet and other performance indicators


SEK b.	Mar 31 2011			Dec 31 2010			Sep 30 2010			June 30 2010			Mar 31 2010
Net cash		48.2			51.3			35.7			25.8			38.5
Interest-bearing liabilities and post-employment benefits		34.8			35.9			40.4			41.8			39.3
Trade receivables		60.6			61.1			57.8			69.4			62.7
Days sales outstanding		101			88			109			133			117
Inventory		32.1			29.9			30.3			29.4			24.1
Of which regional inventory		21.1			18.7			19.1			18.3			14.0
Inventory days		87			74			82			81			75
Payable days		70			62			62			61			59
Customer financing, net		4.2			4.4			3.5			3.1			2.9
Return on capital employed		13	%		10	%		8	%		6	%		5	%
Equity ratio		53	%		52	%		52	%		51	%		53	%

Trade receivables decreased sequentially by SEK 0.5 b. to SEK 60.6 (61.1) b. due to the strong SEK and lower seasonal decline in sales. Days sales outstanding (DSO) decreased from 117 to 101 days year-over-year as a result of higher sales and strong collections.

Inventory increased sequentially by SEK 2.2 b. to SEK 32.1 (29.9) b. The higher inventory level year-over-year is reflecting higher level of work in progress in the regions and continued ramp up of production. Inventory turnover days increased from 74 to 87 days.

Goodwill decreased SEK 1.4 b. to SEK 25.8 (27.2) b. due to a stronger SEK.

Cash, cash equivalents and short-term investments amounted to SEK 83.0 (87.2) b. The net cash position decreased sequentially by SEK 3.1 b. to SEK 48.2 (51.3) b., mainly due to negative cash flow.

During the quarter, approximately SEK 1.1 b. of provisions were utilized, of which SEK 0.8 b. related to restructuring. Additions of SEK 1.3 b. were made, of which SEK 0.1 b. related to restructuring. Reversals of SEK 0.1 b. were made. Provisions will fluctuate over time depending on business mix, market mix as well as technology shifts.

Total number of employees at the end of the quarter amounted to approximately 91,500 (86,500), an increase by 1,200 from December 31, 2010. In the quarter, some 300 individuals joined Ericsson through acquisitions and approximately 1,000 related to our services business, mainly in Brazil, India and China. Main reductions were made in countries in Western Europe.


Ericsson First Quarter Report 2011		3

SEGMENT RESULTS

Networks


	First quarter									Fourth quarter
SEK b.	2011¹⁾			2010²⁾			Change			2010²⁾			Change
Networks sales		33.2			24.7			35	%		36.4			-9	%
EBITA margin³⁾		20	%		16	%		—			18	%		—
Operating margin		17	%		12	%		—			16	%		—

¹⁾	All numbers for 2011 are stated incl. restructuring charges

²⁾	All numbers for 2010 are stated excl. restructuring charges

³⁾	EBITA - Earnings before interest, tax, amortizations and write-downs of acquired intangibles

Networks’ sales in the quarter were SEK 33.2 (24.7) b. The increase of 35% year-over-year was an effect of high mobile broadband sales. Sales were negatively impacted by a strong SEK. Sequentially sales decreased -9%.

Sales of the multi-standard radio base station RBS 6000 continued to be high as well as of packet-core, IP-routers and microwave based backhaul. CDMA and GSM showed good growth year-over-year and LG-Ericsson performed well also this quarter. GSM demand is primarily driven by capacity needs in countries such as China and India. In China, GSM/EDGE is also used as fall back for mobile broadband coverage.

EBITA margin in the quarter increased year-over-year to 20% (16%) and from 18% sequentially. The increase was driven by increased volumes, business mix with expansions and upgrades and continued efficiency gains.

In Europe the captured network modernization deals will give us an estimated market share increase of approximately three percentage points in the combined 2G/3G market.

SEGMENT SALES BY

QUARTER, 2010 AND 2011

(SEK B)

LOGO

Global Services


	First quarter									Fourth quarter
SEK b.	2011¹⁾			2010²⁾			Change			2010²⁾			Change
Global Services sales		17.4			18.1			-4	%		22.9			-24	%
Of which Professional Services		12.6			13.3			-5	%		16.7			-25	%
Of which Managed Services		4.9			4.9			1	%		5.4			-8	%
Of which Network Rollout		4.9			4.8			0	%		6.2			-21	%
EBITA margin³⁾		7	%		12	%		—			13	%		—
Of which Professional Services		13	%		16	%		—			16	%		—
Operating margin		7	%		11	%		—			12	%		—
Of which Professional Services		12	%		15	%		—			15	%		—

¹⁾	All numbers for 2011 are stated incl. restructuring charges

²⁾	All numbers for 2010 are stated excl. restructuring charges

³⁾	EBITA - Earnings before interest, tax, amortizations and write-downs of acquired intangibles

Global Services sales in the quarter were SEK 17.4 (18.1) b. a decrease of -4% year-over-year, and -24% sequentially. The year-over-year decline is primarily a result of currency exchange rate effects.

Professional Services sales were SEK 12.6 (13.3) b. in the quarter, a decrease of -5% year-over-year and by -25% sequentially, negatively impacted by a low level of integration projects. Managed Services sales increased by 1% year-over-year to SEK 4.9 (4.9) b. and were down -8% sequentially. Currency adjusted sales of Professional Services increased 3% and Managed Services sales increased 11%. Demand for managed services and transformational OSS/BSS projects continued to be high.


Ericsson First Quarter Report 2011		4

Network Rollout sales amounted to SEK 4.9 (4.8) b. in the quarter, flat year-over-year and -21% sequentially. Since network rollout typically lags equipment sales with 6-9 months, sales were negatively impacted by the industry wide component shortage in 2010.

Global Services’ EBITA margin decreased in the quarter, both year-over-year and sequentially. It was impacted by a loss in Network Rollout following large 3G rollouts in India with low margins and the effects of supply constraints in 2010.

EBITA margin for Professional Services decreased to 13% (16%) year-over-year and sequentially due to lower proportion of product near systems integration business and with a percentage point negative impact from restructuring during the first quarter.

During the quarter nine new managed services contracts were signed of which five were extensions or expansions.

Ericsson provides support for networks that serve more than two billion subscribers worldwide. The total number of subscribers in networks managed by Ericsson is more than 800 million, of which 450 million in network operation contracts and 350 million in field maintenance.

Multimedia


	First quarter									Fourth quarter
SEK b.	2011¹⁾			2010²⁾			Change			2010²⁾			Change
Multimedia sales		2.3			2.3			-1	%		3.5			-34	%
EBITA margin³⁾		-7	%		-5	%		—			16	%		—
Operating margin		-15	%		-13	%		—			11	%		—

¹⁾	All numbers for 2011 are stated incl. restructuring charges

²⁾	All numbers for 2010 are stated excl. restructuring charges

³⁾	EBITA - Earnings before interest, tax, amortizations and write-downs of acquired intangibles

Multimedia sales in the quarter decreased -1% year-over-year and -34% sequentially. Sales of multimedia brokering (IPX) and revenue management were good. However, sales for TV solutions were weaker. EBITA margin amounted to -7% (-5%) due to lower volumes and product mix, partly offset by lower operating expenses.

Sony Ericsson


	First quarter									Fourth quarter
EUR m.	2011			2010			Change			2010			Change
Number of units shipped (m.)		8.1			10.5			-23	%		11.2			-28	%
Average selling price (EUR)		141			134			5	%		136			4	%
Net sales		1,145			1,405			-19	%		1,528			-25	%
Gross margin		33	%		31	%		—			30	%		—
Operating margin		2	%		1	%		—			3	%		—
Income before taxes		15			18			—			35			—
Income before taxes, excl restructuring charges		15			21			—			39			—
Net income		11			21			—			8			—
Operating cash flow		-353			-94			—			-128			—

Sony Ericsson is executing on its strategy to grow within the smartphone segment and during the quarter over 60% of total sales were smartphones. The company is experiencing some disruptions in its supply chain from the earthquake in Japan.

Cash flow from operating activities during the quarter was negative EUR 353 million, mainly due to inventory investments. New external borrowings of EUR 375 million were made in the quarter resulting in total borrowings of EUR 604 million on March 31, 2011. Total cash balances amounted to EUR 599 million. Guarantees from the Parent Company Telefonaktiebolaget LM Ericsson to Sony Ericsson Mobile Communications AB amounted to SEK 2.0 (1.1) b. in the quarter.

Sony Ericsson estimates that its market share for smartphones was approximately 5% in units and approximately 3% in value.

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


Ericsson First Quarter Report 2011		5

ST-Ericsson


	First quarter							Fourth quarter
USD m.	2011		2010		Change			2010		Change
Net sales		444		606		-27	%		577		-23	%
Adjusted operating income¹⁾		-149		-114		—			-119		—
Operating income		-178		-164		—			-171		—
Net income		-178		-154		—			-177		—

¹⁾	Operating income adjusted for amortization of acquired intangibles and restructuring charges

The company is currently in a shift from legacy to new products. The drop in legacy products was higher than expected during the quarter. Securing the successful execution and delivery of the new products to customers is critical for the long-term value of the company.

The operating loss increased sequentially primarily due to lower sales volumes. The company is taking additional action to improve internal efficiency in product development and further reductions of selling, general and administrative expenses.

The net financial position at March 31, 2011, was negative USD -195 (-82) million. For the second quarter ST-Ericsson expects net sales to decline sequentially primarily due to the ongoing decline in legacy products. By the end of the quarter ST-Ericsson had utilized USD 234 million of a short-term credit facility granted on a 50/50 basis by the parent companies. Ericsson is committed to financially support ST-Ericsson’s execution of their new portfolio.

ST-Ericsson is reported in US GAAP. Ericsson’s share in ST-Ericsson’s income before tax, adjusted to IFRS, was SEK -0.6 (-0.5) b. in the quarter.

REGIONAL OVERVIEW


	First quarter							Fourth quarter
Sales, SEK b.	2011		2010		Change			2010		Change
North America		13.2		9.5		39	%		14.1		-6	%
Latin America		4.0		4.0		1	%		6.1		-34	%
Northern Europe and Central Asia		3.4		2.3		46	%		4.8		-30	%
Western and Central Europe		4.8		5.2		-8	%		5.9		-19	%
Mediterranean		4.8		5.1		-5	%		6.9		-31	%
Middle East		3.1		3.9		-22	%		4.6		-34	%
Sub-Saharan Africa		2.2		2.4		-9	%		2.0		9	%
India		3.2		2.3		38	%		2.8		11	%
China and North East Asia		8.6		5.0		74	%		9.5		-9	%
South East Asia and Oceania		3.1		3.5		-12	%		3.9		-21	%
Other		2.6		1.9		37	%		2.2		25	%

Total		53.0		45.1		17	%		62.8		-16	%

North American sales increased 39% year-over-year and decreased -6% sequentially, negatively impacted by a strong SEK. Growth in the region was driven by continued data traffic increase. Capacity expansions are being carried out via the addition of new hardware as well as software upgrades along with associated services. Since iOS and Android-based devices have been introduced to the market these have become core drivers of traffic growth. In addition, LTE-equipped devices will be deployed in 2011.

Latin America sales increased 1% year-over-year and decreased -34% sequentially. Demand for mobile broadband is increasing in the region, driven by mobile data traffic. At the same time, there are rural expansion projects, driving demand for voice related products and services. LTE trials are ongoing across the region.

Northern Europe and Central Asia sales increased 46% year-over-year and decreased -30% sequentially. The year-over-year increase is mainly driven by build out of mobile broadband coverage in Russia where mobile data traffic shows triple-digit growth. Russia was strong also in the first quarter, spurred by network rollouts with large operators such as Vimpelcom and MTS.

Western and Central Europe sales decreased -8% year-over-year and -19% sequentially due to somewhat cautious spending by major operators while preparing for network modernization projects. Deployment of multi-standard radio base stations has commenced as part of the network modernization program that Ericsson is delivering to Telefónica O2 UK along with the continued supply of core network infrastructure. In Germany LTE roll-out to Vodafone continues.


Ericsson First Quarter Report 2011		6

Mediterranean sales decreased -5% year-over-year and -31% sequentially, negatively impacted by the political unrest in North Africa as well as the general economic situation in Spain, Portugal and Greece. Modernization projects started in Spain and Italy. Managed services developed favorably in the quarter due to new and extended contracts in Spain. Tenders for 4G/LTE spectrum have been or will soon be initiated in Spain, Portugal and Italy.

Middle East sales decreased -22% year-over-year and -34% sequentially, impacted by political unrest in the region. 2G declined in the quarter, while sales of mobile broadband continued to increase across the region. Mobile broadband volumes are now almost on par with 2G volumes. 4G/LTE is expected to be rolled out in parts of the Gulf region later this year. Managed services increased both year-over-year and sequentially while revenue management, consulting and systems integration as well as network rollout had a weak quarter.

Sub-Saharan Africa sales decreased by -9% year-over-year, but increased sequentially by 9%. The sequential improvement is primarily due to 2G expansions. Services had a weaker quarter due to delayed deliveries affecting network rollouts and the continued slow development for revenue management.

India sales increased 38% year-over-year and 11% sequentially. Growth was driven by 3G deployments also comparing to low level investments during first half of 2010 awaiting 3G licenses. BWA license holders are currently deciding on vendors for their TD-LTE networks where initial roll-outs are expected later in the year.

China and North East Asia sales increased 74% year-over-year and was down -9% sequentially. The year-over-year increase is mainly related to growth in mobile broadband in Japan, 2G expansions in China and added sales from LG-Ericsson. In Japan data traffic has doubled over the last 18 months and in Korea it has increased 11 times in the last 12 months. Ericsson is one of the vendors selected for a large-scale TD-LTE trial with China Mobile.

South East Asia and Oceania sales decreased -12% year-over-year and -21% sequentially. Operators’ investments in mobile broadband are not yet compensating for drop in 2G sales. Mobile data services are different levels of maturity across the region. However, data traffic grows both in volumes and subscribers. Multimedia showed good development in the quarter due to the first sales of revenue management solutions for data traffic.

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

MARKET DEVELOPMENT

Growth rates are based on Ericsson and market estimates

Mobile infrastructure market

The global mobile infrastructure market slightly declined in the range of mid-single digits in USD terms in 2010. During the third quarter in 2010, the market conditions improved and growth picked up in the fourth quarter 2010.

Ericsson mobile infrastructure market share, including the Nortel acquisition, increased 2010 in USD terms. The CDMA business, acquired from Nortel, increased market shares in USD terms, driven by strong mobile broadband demand in North America. Measured in shipped radio base stations 2010, Ericsson increased its share of WCDMA/HSPA and strengthened its leading position within 4G/LTE. Due to the industry wide component shortage in 2010 Ericsson could not fully meet the demand for GSM. However, deliveries picked up in the first quarter 2011 and it is Ericsson’s view that the company has at least maintained its market share also in GSM.

Data traffic uptake in mobile and fixed networks drives need for higher capacity in areas such as backhaul, aggregation, transport, and routing based on IP and Ethernet technologies. With operators’ focus on increased network quality and efficiency, the ability to deal with high data volumes while maintaining telecom grade service levels is key. This enables operators to provide premium quality and differentiating offerings to the end users. This also drives demand for services targeting the operational efficiency of operators, such as consulting, including network optimization, systems integration and managed services.


Ericsson First Quarter Report 2011		7

Telecom services market

The global telecom services market showed positive growth in mid-single digits in USD terms in 2010, mainly driven by continued strong growth in managed services. Operators’ focus on efficiency drives interest in exploring business models such as managed operations, network sharing and network IT transformation. Estimates show that only around 35-40% of addressable operator network operating expenditure is spent externally on telecom services today leaving significant continued opportunities, particularly for managed services.

End user drivers

Global mobile penetration is 79% and total mobile subscriptions have reached 5.5 billion. India and China accounted for about 48% of the estimated 190 million net additions during the first quarter, adding around 65 and 30 million respectively. Indonesia and Vietnam were third and fourth countries in terms of net additions. India has now passed 800 million subscriptions and the US has passed 300 million subscriptions.

Global fixed broadband subscriptions grew by 14 million new subscriptions to reach 523 million during the fourth quarter 2010, mainly boosted by strong growth in DSL in China. DSL represents more than 60% of all fixed broadband subscriptions.


	Unit	First quarter							Full year										Ericsson forecast
		2010		2011		Change			2006		2007		2008		2009		2010		2011
Mobile subscriptions	Billion		4.8		~5.5		~16	%		2.7		3.3		4.0		4.6		~5.3		~6.1

Net additions	Million		160		~190		~17	%		500		620		660		640		~720		~730
Mobile broadband¹⁾	Million		420		~670		~57	%		55		130		220		370		600		~1,000
Net additions	Million		50		70		~35	%		30		70		90		160		~320		~450

¹⁾	Mobile broadband includes handset and mobile PC for the following technologies: HSPA, LTE, CDMA2000 EVDO, TD-SCDMA and WiMax

Ericsson findings, based on measurements in live networks, show that global mobile data traffic more than doubled in 2010 and mobile data traffic is forecasted to almost double annually over the next few years, driven by 24/7 connectivity and end user demand for bandwidth. Increased proliferation of devices such as smartphones, tablets and laptops will impact the traffic going forward. The traffic forecast could be subject to change if operators start to implement traffic shaping and caps to a larger degree.

To cater for the increased surge for mobile data services, mobile networks are being built-out across the world and WCDMA networks now cover more than 35% of the world’s population. Almost all of these networks have also launched HSPA. At the moment, more than 65% of the commercial HSPA networks have been upgraded, at least partly, to a peak speed of 7.2 Mbps or above. Operators are continuously upgrading to higher speeds and around 6% of the HSPA networks have launched services with 42 Mbps peak speed, currently the highest HSPA speed that is commercially available. In addition, Ericsson has as the first vendor demonstrated 84 and 168 Mbps based on commercial network equipment. Building wider coverage to reach further into the remaining 65% of the population, the availability of affordable handsets, as well as the surge for mobile broadband services and faster speeds, will drive continued strong uptake of HSPA.

Tiered pricing for mobile broadband is now a reality, as many operators today have evolved beyond flat-rate unlimited data models and introduced segmented price plans, such as volume, time or speed based plans. Segmented data price plans intend to attract a wide variety of data users and differentiate the offering, in order to maximize data revenues and to grow service revenues. Many operators in mature mobile broadband markets have today more than offset the decline in voice revenues, not uncommon in mature markets, with increasing data revenues.

In average, a smartphone generates approximately 10 times more traffic compared to a normal feature phone, while a mobile PC user generates 100 times more traffic than a feature phone. There are indications of higher than average per-smartphone traffic in the US networks, however traffic profiles per user do vary considerably between networks and markets.


Ericsson First Quarter Report 2011		8

Yearly WCDMA/HSPA radio access network investments passed GSM investments in 2009, eight years after the 3G introduction in Western Europe. It will remain the dominant access technology for many years to come, in terms of global investment, despite the fact that 4G/LTE is being rolled out and launched. Coexistence of GSM, WCDMA/HSPA, CDMA2000 and 4G/LTE and increasing number of frequency bands pave the way for investments in multi-standard solutions and networks modernization.

PARENT COMPANY INFORMATION

Income after financial items was SEK 3.1 (-0.6) b. The increase in financial net, year-over-year, is mainly due to Group internal dividends. Major changes in the Parent Company’s financial position for the first quarter include; decreased cash, cash equivalents and short-term investments of SEK 2.2 b. and decreased current and non-current liabilities to subsidiaries of SEK 1.8 b. At the end of the quarter cash, cash equivalents and short-term investments amounted to SEK 69.4 (71.6) b. Guarantees to Sony Ericsson Mobile Communications AB are reported as contingent liabilities and amounted to SEK 2.0 (1.1) b. By the end of the quarter ST-Ericsson had utilized USD 117 million of a short-term credit facility.

In accordance with the conditions of the long-term variable compensation program (LTV) for Ericsson employees, 2,625,812 shares from treasury stock were sold or distributed to employees during the first quarter. The holding of treasury stock at March 31, 2011, was 70,462,703 Class B shares.

ANNUAL GENERAL MEETING OF SHAREHOLDERS

The Annual General Meeting of shareholders (AGM) decided, as previously announced and in accordance with the proposal by the Board of Directors, on a dividend payment of SEK 2.25 per share for 2010 and with April 18, 2011, as the date of record for the dividend. The total dividend payment amounts to SEK 7.2 (6.4) b.

In accordance with the proposal by the Nomination Committee, Leif Johansson was elected new Chairman of the Board of Directors and Jacob Wallenberg was elected new member of the Board of Directors, replacing Marcus Wallenberg.

In accordance with the Board of Directors’ proposals, the AGM resolved the implementation of LTV 2011 (Long Term Variable compensation), with the same structure as previous programs but with new performance criteria in the executive performance stock plan.

The AGM also resolved on transfer of shares for implementation of LTV 2011. In addition, the AGM resolved the transfer of treasury stock for previously decided LTV programs.

The AGM resolved in accordance with the Board of Directors’ proposal, on an amendment of the object’s of the company in the Articles of Association (§ 2), to adjust to the Company’s strategy to expand into new industry segments, such as governments, health industry, transport, utilities and mobile money. For more details, see www.ericsson.com/investors

OTHER INFORMATION

Completion of acquisition of Nortel’s Multiservice Switch business

On March 11, 2011, Ericsson announced the completion of the asset purchase agreement to acquire Nortel’s Multiservice Switch business. The acquisition gives Ericsson access to a strong product portfolio and installed base in the data segment while ensuring the supply of the platform for the recently acquired CDMA and GSM units.

The closing follows the announcement on September 25, 2010, that Ericsson was entering into an asset purchase agreement for substantially all of the assets of Nortel’s Multiservice Switch business.

Acquisition of assets from Telenor Connexion

On April 19, 2011, Ericsson announced the acquisition of Telenor Connexion’s machine-to-machine (M2M) technology platform. The acquisition is in line with Ericsson’s ambition to drive the market for M2M communication, adding valuable technology and know-how from Telenor Connexion.

Telenor Connexion will also be first customer on Ericsson’s Device Connection Platform, a service allowing operators to offer M2M connection beyond smartphones and laptops.

The acquisition is not subject to approval from authorities but to contractual agreements before closing.


Ericsson First Quarter Report 2011		9

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 2010. Compared to the risks described in the Annual Report 2010, no material new or changed risk factors or uncertainties have been identified in the quarter.

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

•

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

•

Effects on gross margins and/or working capital of the product mix in the Networks segment between sales of software, upgrades and extensions as well as break-in contracts;

•

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

•

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

•

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

•

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

•

Political unrest or instability in certain markets;

•

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

•

Natural disasters, effecting production, supply and transportation.

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

Stockholm, April 27, 2011

Telefonaktiebolaget LM Ericsson (publ)

Hans Vestberg, President and CEO

Date for next report: July 21, 2011


Ericsson First Quarter Report 2011		10

AUDITORS’ REVIEW REPORT

We have reviewed this report for the period January 1 to March 31, 2011, for Telefonaktiebolaget LM Ericsson (publ). The board of directors and the CEO are responsible for the preparation and presentation of this financial information in accordance with IAS 34 and the Annual Accounts Act.

Our responsibility is to express a conclusion on this financial information based on our review.

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

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

Stockholm, April 27, 2011

PricewaterhouseCoopers AB

Peter Nyllinge

Authorized Public Accountant


Ericsson First Quarter Report 2011		11

EDITOR’S NOTE

To read the complete report with tables, please go to: www.ericsson.com/investors/financial reports/2011/3month11-en.pdf

Ericsson invites media, investors and analysts to a press conference at the Ericsson Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), April 27, 2011. An analysts, investors and media conference call will begin at 14.00 (CET).

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

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

FOR FURTHER INFORMATION, PLEASE CONTACT

Henry Sténson, Senior Vice President, Communications

Phone: +46 10 719 4044

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


Investors		Media

Åse Lindskog, Vice President,		Ola Rembe, Vice President,
Head of Industry and Investor Relations		Head of Corporate Public and Media Relations
Phone: +46 10 719 9725, +46 730 244 872		Phone: +46 10 719 9727, +46 730 244 873
E-mail: investor.relations@ericsson.com		E-mail: media.relations@ericsson.com

Susanne Andersson, Director,		Corporate Public & Media Relations
Investor Relations		Phone: +46 10 719 69 92
Phone: +46 10 719 4631		E-mail: media.relations@ericsson.com
E-mail: investor.relations@ericsson.com
		Telefonaktiebolaget LM Ericsson (publ)
Åsa Konnbjer, Director,		Org. number: 556016-0680
Investor Relations		Torshamnsgatan 23
Phone: +46 10 713 3928		SE-164 83 Stockholm
E-mail: investor.relations@ericsson.com		Phone: +46 10 719 0000
		www.ericsson.com
Stefan Jelvin, Director,
Investor Relations
Phone: +46 10 714 2039
E-mail: investor.relations@ericsson.com


Ericsson First Quarter Report 2011		12

Disclosure Pursuant to the Swedish Securities Markets Act

Ericsson discloses the information provided herein pursuant to the Securities Markets Act. The information was submitted for publication at 07.30 CET, on April 27, 2011.

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 2011		13

FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION


	Page
Financial statements
Consolidated income statement and statement of comprehensive income		15
Consolidated balance sheet		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
Parent Company income statement		21
Statement of comprehensive income		21
Parent Company balance sheet		21

	Page
Additional information
Accounting policies		22
Net sales by segment by quarter		23
Operating income by segment by quarter		24
Operating margin by segment by quarter		24
EBITA by segment by quarter		25
EBITA margin by segment by quarter		25
Net sales by region by quarter		26
Net sales by region by quarter (cont.)		27
External net sales by region by segment		28
Top 5 countries in sales		28
Provisions		29
Number of employees		29
Information on investments in assets subject to depreciation, amortization and impairment		29
Other information		30
Ericsson planning assumptions for year 2011		30
Consolidated operating income, excluding restructuring charges		31
Restructuring charges by function		31
Restructuring charges by segment		31
Operating income by segment, excluding restructuring charges		32
Operating margin by segment, excluding restructuring charges		32
EBITA by segment, excluding restructuring charges		32
EBITA margin by segment, excluding restructuring charges		32


Ericsson First Quarter Report 2011		14

Consolidated Income Statement


	Jan - Mar									Jan - Dec
SEK million	2010			2011			Change			2010

Net sales		45,112			52,966			17	%		203,348
Cost of sales		-28,527			-32,578			14	%		-129,094

Gross income		16,585			20,388			23	%		74,254
Gross margin (%)		36.8	%		38.5	%					36.5	%

Research and development expenses		-7,526			-7,991			6	%		-31,558
Selling and administrative expenses		-7,008			-6,441			-8	%		-27,072

Operating expenses		-14,534			-14,432			-1	%		-58,630

Other operating income and expenses		302			343			14	%		2,003

Operating income before shares in earnings of JV and associated companies		2,353			6,299			168	%		17,627
Operating margin before shares in earnings of JV and associated companies (%)		5.2	%		11.9	%					8.7	%

Shares in earnings of JV and associated companies		-372			-468			26	%		-1,172

Operating income		1,981			5,831			194	%		16,455

Financial income		278			302						1,047
Financial expenses		-438			-306						-1,719

Income after financial items		1,821			5,827						15,783

Taxes		-547			-1,747						-4,548

Net income		1,274			4,080						11,235

Net income attributable to:
- Stockholders of the Parent Company		1,264			4,103						11,146
- Non-controlling interests		10			-23						89

Other information
Average number of shares, basic (million)		3,195			3,202						3,197
Earnings per share, basic (SEK)¹⁾		0.40			1.28						3.49
Earnings per share, diluted (SEK)¹⁾		0.39			1.27						3.46

Statement of Comprehensive Income


	Jan - Mar				Jan - Dec
SEK million	2010		2011		2010

Net income		1,274		4,080		11,235

Other comprehensive income
Actuarial gains and losses, and the effect of the asset ceiling, related to pensions		-273		388		3,892
Revaluation of other investments in shares and participations
Fair value remeasurement		—		-1		7

Cash flow hedges
Gains/losses arising during the period		163		1,624		966
Reclassification adjustments for gains /losses included in profit or loss		-290		-921		-238
Adjustments for amounts transferred to initial carrying amount of hedged items		—		—		-136
Changes in cumulative translation adjustments		-551		-3,417		-3,259
Share of other comprehensive income on JV and associated companies		-44		-744		-434
Tax on items relating to components of other comprehensive income		11		-222		-1,120

Total other comprehensive income		-984		-3,293		-322

Total comprehensive income		290		787		10,913

Total comprehensive income attributable to:
Stockholders of the Parent Company		259		906		10,814
Non-controlling interests		31		-119		99

¹⁾	Based on Net income attributable to stockholders of the Parent Company


Ericsson First Quarter Report 2011, April 27, 2011		15

Consolidated Balance Sheet


SEK million	Dec 31 2010		Mar 31 2011

ASSETS
Non-current assets
Intangible assets
Capitalized development expenses		3,010		3,047
Goodwill		27,151		25,782
Intellectual property rights, brands and other intangible assets		16,658		15,388

Property, plant and equipment		9,434		9,171

Financial assets
Equity in JV and associated companies		9,803		8,662
Other investments in shares and participations		219		239
Customer financing, non-current		1,281		1,440
Other financial assets, non-current		3,079		3,020

Deferred tax assets		12,737		13,090

		83,372		79,839

Current assets
Inventories		29,897		32,146

Trade receivables		61,127		60,622
Customer financing, current		3,123		2,713
Other current receivables		17,146		19,745

Short-term investments		56,286		52,286
Cash and cash equivalents		30,864		30,756

		198,443		198,268

Total assets		281,815		278,107

EQUITY AND LIABILITIES
Equity
Stockholders’ equity		145,106		146,142
Non-controlling interest in equity of subsidiaries		1,679		1,560

		146,785		147,702

Non-current liabilities
Post-employment benefits		5,092		3,968
Provisions, non-current		353		310
Deferred tax liabilities		2,571		2,427
Borrowings, non-current		26,955		26,196
Other non-current liabilities		3,296		3,358

		38,267		36,259

Current liabilities
Provisions, current		9,391		9,219
Borrowings, current		3,808		4,676
Trade payables		24,959		24,849
Other current liabilities		58,605		55,402

		96,763		94,146

Total equity and liabilities		281,815		278,107

Of which interest-bearing liabilities and post-employment benefits		35,855		34,840

Of which net cash		51,295		48,202

Assets pledged as collateral		658		589
Contingent liabilities		875		853


Ericsson First Quarter Report 2011, April 27, 2011		16

Consolidated Statement of Cash Flows


	Jan - Mar				Jan - Dec
SEK million	2010		2011		2010

Operating activities
Net income		1,274		4,080		11,235
Adjustments to reconcile net income to cash
Taxes		-166		721		351
Earnings/dividends in JV and associated companies		313		452		1,476
Depreciation, amortization and impairment losses		3,133		2,209		9,953
Other		-435		-1,201		710

Net income affecting cash		4,119		6,261		23,725

Changes in operating net assets
Inventories		-1,465		-3,462		-7,917
Customer financing, current and non-current		-598		196		-2,125
Trade receivables		3,954		-1,610		4,406
Trade payables		-955		-255		5,964
Provisions and post-employment benefits		-1,058		-752		-2,739
Other operating assets and liabilities, net		-1,703		-3,284		5,269

		-1,825		-9,167		2,858
Cash flow from operating activities		2 294		-2,906		26,583

Investing activities
Investments in property, plant and equipment		- 659		-980		-3,686
Sales of property, plant and equipment		47		97		124
Acquisitions/divestments of subsidiaries and other operations, net		-1 080		-455		-2,832
Product development		- 278		-269		-1,644
Other investing activities		1 859		179		-1,487
Short-term investments		-3 844		3,706		-3,016

Cash flow from investing activities		-3,955		2,278		-12,541

Cash flow before financing activities		-1,661		-628		14,042

Financing activities
Dividends paid		—		—		-6,677
Other financing activities		-56		1,240		1,007

Cash flow from financing activities		-56		1,240		-5,670

Effect of exchange rate changes on cash		-42		-720		-306

Net change in cash		-1,759		-108		8,066

Cash and cash equivalents, beginning of period		22,798		30,864		22,798

Cash and cash equivalents, end of period		21,039		30,756		30,864


Ericsson First Quarter Report 2011, April 27, 2011		17

Consolidated Statement of Changes in Equity


SEK million	Jan - Mar 2010		Jan - Mar 2011		Jan - Dec 2010

Opening balance		141,027		146,785		141,027
Total comprehensive income		290		787		10,913
Sale/Repurchase of own shares		3		23		52
Stock purchase and stock option plans		158		107		762
Dividends paid		—		—		-6,677
Business combinations		-25		—		708

Closing balance		141,453		147,702		146,785


Ericsson First Quarter Report 2011, April 27, 2011		18

Consolidated Income Statement – Isolated Quarters


	2010												2011
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1

Net sales		45,112			47,972			47,481			62,783			52,966
Cost of sales		-28,527			-30,235			-29,337			-40,995			-32,578

Gross income		16,585			17,737			18,144			21,788			20,388
Gross margin (%)		36.8	%		37.0	%		38.2	%		34.7	%		38.5	%

Research and development expenses		-7,526			-7,751			-7,689			-8,592			-7,991
Selling and administrative expenses		-7,008			-7,158			-5,775			-7,131			-6,441

Operating expenses		-14,534			-14,909			-13,464			-15,723			-14,432

Other operating income and expenses		302			500			620			581			343

Operating income before shares in earnings of JV and associated companies		2,353			3,328			5,300			6,646			6,299
Operating margin before shares in earnings of JV and associated companies (%)		5.2	%		6.9	%		11.2	%		10.6	%		11.9	%

Shares in earnings of JV and associated companies		-372			-308			-90			-402			-468

Operating income		1,981			3,020			5,210			6,244			5,831

Financial income		278			470			168			131			302
Financial expenses		-438			-596			-302			-383			-306

Income after financial items		1,821			2,894			5,076			5,992			5,827

Taxes		-547			-867			-1,523			-1,611			-1,747

Net income		1,274			2,027			3,553			4,381			4,080


Net income attributable to:
- Stockholders of the Parent Company		1,264			1,881			3,677			4,324			4,103
- Non-controlling interests		10			146			-124			57			-23

Other information
Average number of shares, basic (million)		3,195			3,196			3,198			3,200			3,202
Earnings per share, basic (SEK)¹⁾		0.40			0.59			1.15			1.35			1.28
Earnings per share, diluted (SEK)¹⁾		0.39			0.58			1.14			1.34			1.27

¹⁾	Based on Net income attributable to stockholders of the Parent Company.


Ericsson First Quarter Report 2011, April 27, 2011		19

Consolidated Statement of Cash Flows – Isolated Quarters


	2010								2011
Isolated quarters, SEK million	Q1		Q2		Q3		Q4		Q1

Operating activities
Net income		1,274		2,027		3,553		4,381		4,080
Adjustments to reconcile net income to cash
Taxes		-166		-560		-226		1,303		721
Earnings/dividends in JV and associated companies		313		364		123		676		452
Depreciation, amortization and impairment losses		3,133		2,304		2,270		2,246		2,209
Other		-435		-260		-947		2,352		-1,201

Net income affecting cash		4,119		3,875		4,773		10,958		6,261

Changes in operating net assets
Inventories		-1,465		-3,462		-3,763		773		-3,462
Customer financing, current and non-current		-598		-208		-437		-882		196
Trade receivables		3,954		-3,816		7,443		-3,175		-1,610
Trade payables		-955		1,433		1,292		4,194		-255
Provisions and post-employment benefits		-1,058		788		-1,726		-743		-752
Other operating assets and liabilities, net		-1,703		-1,317		4,237		4,052		-3,284

		-1,825		-6,582		7,046		4,219		-9,167

Cash flow from operating activities		2,294		-2,707		11,819		15,177		-2,906

Investing activities
Investments in property, plant and equipment		-659		-1,016		-1,027		-984		-980
Sales of property, plant and equipment		47		45		17		15		97
Acquisitions/divestments of subsidiaries and other operations, net		-1,080		-868		-559		-325		-455
Product development		-278		-724		-317		-325		-269
Other investing activities		1,859		-1,819		-817		-710		179
Short-term investments		-3,844		5,949		-3,368		-1,753		3,706

Cash flow from investing activities		-3,955		1,567		-6,071		-4,082		2,278

Cash flow before financing activities		-1,661		-1,140		5,748		11,095		-628

Financing activities
Dividends paid		—		-6,401		-238		-38		—
Other financing activities		-56		1,529		1,165		-1,631		1,240

Cash flow from financing activities		-56		-4,872		927		-1,669		1,240

Effect of exchange rate changes on cash		-42		583		-1,088		241		-720

Net change in cash		-1,759		-5,429		5,587		9,667		-108

Cash and cash equivalents, beginning of period		22,798		21,039		15,610		21,197		30,864

Cash and cash equivalents, end of period		21,039		15,610		21,197		30,864		30,756


Ericsson First Quarter Report 2011, April 27, 2011		20

Parent Company Income Statement


	Jan - Mar				Jan - Dec
SEK million	2010		2011		2010

Net sales		10		—		33
Cost of sales		-7		—		-29

Gross income		3		—		4

Operating expenses		-1,316		-419		-2,956
Other operating income and expenses		612		746		3,118

Operating income		-701		327		166

Financial net		71		2,767		6,645

Income after financial items		-630		3,094		6,811

Transfers to (-) / from untaxed reserves		—		—		-100
Taxes		200		-130		-117

Net income		-430		2,964		6,594

Statement of Comprehensive Income


	Jan - Mar				Jan - Dec
SEK million	2010		2011		2010

Net income		-430		2,964		6,594

Cash flow hedges
Gains/losses arising during the period		—		—		136
Adjustments for amounts transferred to initial carrying amount of hedged items		—		—		-136

Tax on items reported directly in or transferred from equity		—		—		—

Other comprehensive income		—		—		—

Total comprehensive income		-430		2,964		6,594

Parent Company Balance Sheet


	Dec 31		Mar 31
SEK million	2010		2011

ASSETS
Fixed assets
Intangible assets		1,046		989
Tangible assets		527		541
Financial assets		99,013		100,489

		100,586		102,019

Current assets
Inventories		57		37
Receivables		21,554		21,793
Short-term investments		56,148		52,286
Cash and cash equivalents		15,439		17,118

		93,198		91,234

Total assets		193,784		193,253


STOCKHOLDERS’ EQUITY, PROVISIONS AND LIABILITIES
Equity
Restricted equity		47,859		47,859
Non-restricted equity		42,974		45,979

		90,833		93,838

Untaxed reserves		1,015		1,015

Provisions		960		905

Non-current liabilities		52,842		52,190

Current liabilities		48,134		45,305

Total stockholders’ equity, provisions and liabilities		193,784		193,253


Assets pledged as collateral		658		589
Contingent liabilities		13,783		15,774


Ericsson First Quarter Report 2011, April 27, 2011		21

Accounting Policies

The Group

This interim report is prepared in accordance with IAS 34. The term “IFRS” used in this document refers to the application of IAS and IFRS as well as interpretations of these standards as issued by IASB’s Standards Interpretation Committee (SIC) and IFRS Interpretations Committee. The accounting policies adopted are consistent with those of the annual report for the year ended December 31, 2010, and should be read in conjunction with that annual report.

As from January 1, 2011, the Company has applied the following new or amended IFRSs and IFRICs:

•

Improvements to IFRSs (Issued by IASB in May 2010)

•

IFRIC 14, amendment, the limit on a defined benefit asset, minimum funding requirements and their interaction (November 26, 2009)

•

IFRIC 19, Extinguishing financial liabilities with equity instruments (November 26, 2009)

•

IAS 24, revised, Related party disclosures (November 4, 2009)

•

IAS 32, amendment, Classification of Rights Issues (October 8, 2009)

None of the new or amended standards and interpretations has had any significant impact on the financial result or position of the Company. There is no difference between IFRS effective as per March 31, 2011 and IFRS as endorsed by the EU.


Ericsson First Quarter Report 2011, April 27, 2011		22

Net Sales by Segment by Quarter

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


	2010												2011
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1
Networks		24,704			25,472			26,087			36,445			33,249
Global Services		18,098			20,080			19,076			22,869			17,435
Of which Professional Services		13,251			14,838			13,736			16,704			12,571
Of which Managed Services		4,888			5,642			5,227			5,361			4,924
Of which Network Rollout		4,847			5,242			5,340			6,165			4,864
Multimedia		2,310			2,420			2,318			3,469			2,282

Total		45,112			47,972			47,481			62,783			52,966


	2010												2011
Sequential change, percent	Q1			Q2			Q3			Q4			Q1
Networks		-22	%		3	%		2	%		40	%		-9	%
Global Services		-22	%		11	%		-5	%		20	%		-24	%
Of which Professional Services		-20	%		12	%		-7	%		22	%		-25	%
Of which Managed Services		-4	%		15	%		-7	%		3	%		-8	%
Of which Network Rollout		-27	%		8	%		2	%		15	%		-21	%
Multimedia		-31	%		5	%		-4	%		50	%		-34	%

Total		-23	%		6	%		-1	%		32	%		-16	%


				2010									2011
Year over year change, percent	Q1			Q2			Q3			Q4			Q1
Networks		-14	%		-12	%		6	%		14	%		35	%
Global Services		3	%		0	%		3	%		-1	%		-4	%
Of which Professional Services		4	%		5	%		7	%		1	%		-5	%
Of which Managed Services		17	%		23	%		46	%		5	%		1	%
Of which Network Rollout		3	%		-12	%		-8	%		-8	%		0	%
Multimedia		-29	%		-27	%		-31	%		3	%		-1	%

Total		-9	%		-8	%		2	%		8	%		17	%


	2010												2011
Year to date, SEK million	Jan-Mar			Jan-Jun			Jan-Sep			Jan-Dec			Jan-Mar
Networks		24,704			50,176			76,263			112,708			33,249
Global Services		18,098			38,178			57,254			80,123			17,435
Of which Professional Services		13,251			28,089			41,825			58,529			12,571
Of which Managed Services		4,888			10,530			15,757			21,118			4,924
Of which Network Rollout		4,847			10,089			15,429			21,594			4,864
Multimedia		2,310			4,730			7,048			10,517			2,282

Total		45,112			93,084			140,565			203,348			52,966


Year to date, year over year change, percent	2010												2011
Year to date, year over year change, percent	Jan-Mar			Jan-Jun			Jan-Sep			Jan-Dec			Jan-Mar
Networks		-14	%		-13	%		-7	%		-1	%		35	%
Global Services		3	%		2	%		2	%		1	%		-4	%
Of which Professional Services		4	%		5	%		5	%		4	%		-5	%
Of which Managed Services		17	%		20	%		28	%		21	%		1	%
Of which Network Rollout		3	%		-5	%		-6	%		-7	%		0	%
Multimedia		-29	%		-28	%		-29	%		-21	%		-1	%

Total		-9	%		-8	%		-5	%		-2	%		17	%


Ericsson First Quarter Report 2011, April 27, 2011		23

Operating Income by Segment by Quarter


	2010								2011
Isolated quarters, SEK million	Q1		Q2		Q3		Q4		Q1
Networks		1,540		2,507		3,717		4,717		5,744
Global Services		1,325		1,377		1,891		1,920		1,146
Of which Professional Services		1,419		1,331		1,925		1,875		1,486
Of which Network Rollout		-94		46		-34		45		-340
Multimedia		-335		-479		-187		358		-338
Unallocated ¹⁾		-158		-128		-109		-410		-228

Subtotal Segments excluding Sony Ericsson and ST-Ericsson		2,372		3,277		5,312		6,585		6,324

Sony Ericsson		76		134		290		164		71
ST-Ericsson -467				-391		-392		-505		-564

Subtotal Sony Ericsson and ST-Ericsson		-391		-257		-102		-341		-493

Total		1,981		3,020		5,210		6,244		5,831


	2010								2011
Year to date, SEK million	Jan-Mar		Jan-Jun		Jan-Sep		Jan-Dec		Jan-Mar
Networks		1,540		4,047		7,764		12,481		5,744
Global Services		1,325		2,702		4,593		6,513		1,146
Of which Professional Services		1,419		2,750		4,675		6,550		1,486
Of which Network Rollout		-94		-48		-82		-37		-340
Multimedia		-335		-814		-1,001		-643		-338
Unallocated ¹⁾		-158		-286		-395		-805		-228

Subtotal Segments excluding Sony Ericsson and ST-Ericsson		2,372		5,649		10,961		17,546		6,324

Sony Ericsson		76		210		500		664		71
ST-Ericsson -467				-858		-1,250		-1,755		-564

Subtotal Sony Ericsson and ST-Ericsson		-391		-648		-750		-1,091		-493
Total		1,981		5,001		10,211		16,455		5,831

Operating Margin by Segment by Quarter


	2010												2011
As percentage of net sales, isolated quarters	Q1			Q2			Q3			Q4			Q1
Networks		6	%		10	%		14	%		13	%		17	%
Global Services		7	%		7	%		10	%		8	%		7	%
Of which Professional Services		11	%		9	%		14	%		11	%		12	%
Of which Network Rollout		-2	%		1	%		-1	%		1	%		-7	%
Multimedia		-15	%		-20	%		-8	%		10	%		-15	%

Subtotal excluding Sony Ericsson and ST-Ericsson		5	%		7	%		11	%		10	%		12	%


	2010												2011
As percentage of net sales, Year to date	Jan-Mar			Jan-Jun			Jan-Sep			Jan-Dec			Jan-Mar
Networks		6	%		8	%		10	%		11	%		17	%
Global Services		7	%		7	%		8	%		8	%		7	%
Of which Professional Services		11	%		10	%		11	%		11	%		12	%
Of which Network Rollout		-2	%		0	%		-1	%		0	%		-7	%
Multimedia		-15	%		-17	%		-14	%		-6	%		-15	%

Subtotal excluding Sony Ericsson and ST-Ericsson		5	%		6	%		8	%		9	%		12	%

¹⁾	“Unallocated” consists mainly of costs for corporate staff, non-operational capital gains and losses.


Ericsson First Quarter Report 2011, April 27, 2011		24

EBITA by Segment by Quarter


	2010								2011
Isolated quarters, SEK million	Q1		Q2		Q3		Q4		Q1
Networks		3,052		3,355		4,774		5,597		6,571
Global Services		1,770		1,523		1,954		2,117		1,278
Of which Professional Services		1,764		1,449		1,980		2,018		1,597
Of which Network Rollout		6		74		-26		99		-319
Multimedia		-123		-262		-7		538		-163
Unallocated ¹⁾		-158		-127		-108		-408		-226

Subtotal Segments excluding Sony Ericsson and ST-Ericsson		4,541		4,489		6,613		7,844		7,460

Sony Ericsson		76		134		290		164		71
ST-Ericsson -467				-391		-392		-505		-564

Subtotal Sony Ericsson and ST-Ericsson		-391		-257		-102		-341		-493

Total		4,150		4,232		6,511		7,503		6,967


	2010								2011
Year to date, SEK million	Jan-Mar		Jan-Jun		Jan-Sep		Jan-Dec		Jan-Mar
Networks		3,052		6,407		11,181		16,778		6,571
Global Services		1,770		3,293		5,247		7,364		1,278
Of which Professional Services		1,764		3,213		5,193		7,211		1,597
Of which Network Rollout		6		80		54		153		-319
Multimedia		-123		-385		-392		146		-163
Unallocated ¹⁾		-158		-285		-393		-801		-226

Subtotal Segments excluding Sony Ericsson and ST-Ericsson		4,541		9,030		15,643		23,487		7,460

Sony Ericsson		76		210		500		664		71
ST-Ericsson -467				-858		-1,250		-1,755		-564

Subtotal Sony Ericsson and ST-Ericsson		-391		-648		-750		-1,091		-493

Total		4,150		8,382		14,893		22,396		6,967

EBITA Margin by Segment by Quarter


	2010												2011
As percentage of net sales, isolated quarters	Q1			Q2			Q3			Q4			Q1
Networks		12	%		13	%		18	%		15	%		20	%
Global Services		10	%		8	%		10	%		9	%		7	%
Of which Professional Services		13	%		10	%		14	%		12	%		13	%
Of which Network Rollout		0	%		1	%		-1	%		2	%		-7	%
Multimedia		-5	%		-11	%		0	%		15	%		-7	%

Subtotal excluding Sony Ericsson and ST-Ericsson		10	%		9	%		14	%		12	%		14	%


	2010												2011
As percentage of net sales, Year to date	Jan-Mar			Jan-Jun			Jan-Sep			Jan-Dec			Jan-Mar
Networks		12	%		13	%		15	%		15	%		20	%
Global Services		10	%		9	%		9	%		9	%		7	%
Of which Professional Services		13	%		11	%		12	%		12	%		13	%
Of which Network Rollout		0	%		1	%		0	%		1	%		-7	%
Multimedia		-5	%		-8	%		-6	%		1	%		-7	%

Subtotal excluding Sony Ericsson and ST-Ericsson		10	%		10	%		11	%		12	%		14	%

²⁾	“Unallocated” consists mainly of costs for corporate staff, non-operational capital gains and losses.


Ericsson First Quarter Report 2011, April 27, 2011		25

Net Sales by Region by Quarter


	2010												2011
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1
North America		9,498			13,050			12,861			14,064			13,162
Latin America		3,964			4,200			3,667			6,051			4,015
Northern Europe & Central Asia¹⁾ ²⁾		2,300			2,679			2,363			4,829			3,365
Western & Central Europe²⁾		5,235			4,414			4,302			5,917			4,806
Mediterranean²⁾		5,060			5,630			5,020			6,918			4,799
Middle East		3,948			3,796			2,721			4,634			3,070
Sub Saharan Africa		2,418			2,951			1,795			2,030			2,212
India		2,303			1,351			2,129			2,843			3,169
China & North East Asia		4,950			4,607			6,940			9,468			8,633
South East Asia & Oceania		3,517			3,643			3,822			3,920			3,108
Other¹⁾ ²⁾		1,919			1,651			1,861			2,109			2,627

Total		45,112			47,972			47,481			62,783			52,966

¹⁾ Of which Sweden		1,047			996			1,023			1,171			927
²⁾ Of which EU		11,065			10,384			9,664			12,594			10,020


	2010												2011
Sequential change, percent	Q1			Q2			Q3			Q4			Q1
North America		1	%		37	%		-1	%		9	%		-6	%
Latin America		-32	%		6	%		-13	%		65	%		-34	%
Northern Europe & Central Asia¹⁾ ²⁾		-34	%		16	%		-12	%		104	%		-30	%
Western & Central Europe²⁾		-15	%		-16	%		-3	%		38	%		-19	%
Mediterranean ²⁾		-28	%		11	%		-11	%		38	%		-31	%
Middle East		-22	%		-4	%		-28	%		70	%		-34	%
Sub Saharan Africa		-37	%		22	%		-39	%		13	%		9	%
India		-33	%		-41	%		58	%		34	%		11	%
China & North East Asia		-33	%		-7	%		51	%		36	%		-9	%
South East Asia & Oceania		-32	%		4	%		5	%		3	%		-21	%
Other¹⁾ ²⁾		30	%		-14	%		13	%		13	%		25	%

Total		-23	%		6	%		-1	%		32	%		-16	%

¹⁾ Of which Sweden		43	%		-5	%		3	%		14	%		-21	%
²⁾ Of which EU		-15	%		-6	%		-7	%		30	%		-20	%


	2010												2011
Year-over-year change, percent	Q1			Q2			Q3			Q4			Q1
North America		99	%		128	%		223	%		49	%		39	%
Latin America		-9	%		-12	%		-27	%		3	%		1	%
Northern Europe & Central Asia¹⁾ ²⁾		-20	%		-7	%		-13	%		38	%		46	%
Western & Central Europe²⁾		-3	%		-19	%		-22	%		-4	%		-8	%
Mediterranean²⁾		-17	%		-17	%		-3	%		-2	%		-5	%
Middle East		0	%		-20	%		-40	%		-8	%		-22	%
Sub Saharan Africa		-48	%		-19	%		-44	%		-47	%		-9	%
India		-43	%		-63	%		-49	%		-17	%		38	%
China & North East Asia		-15	%		-36	%		24	%		28	%		74	%
South East Asia & Oceania		-32	%		-36	%		-20	%		-24	%		-12	%
Other¹⁾ ²⁾		-19	%		3	%		1	%		43	%		37	%

Total		-9	%		-8	%		2	%		8	%		17	%

¹⁾ Of which Sweden		-13	%		-9	%		-5	%		60	%		-11	%
²⁾ Of which EU		-12	%		-18	%		-12	%		-4	%		-9	%


Ericsson First Quarter Report 2011, April 27, 2011		26

Net Sales by Region by Quarter (cont.)


	2010												2011
Year to date, SEK million	Jan-Mar			Jan-Jun			Jan-Sep			Jan-Dec			Jan-Mar
North America		9,498			22,548			35,409			49,473			13,162
Latin America		3,964			8,164			11,831			17,882			4,015
Northern Europe & Central Asia¹⁾ ²⁾		2,300			4,979			7,342			12,171			3,365
Western & Central Europe²⁾		5,235			9,649			13,951			19,868			4,806
Mediterranean²⁾		5,060			10,690			15,710			22,628			4,799
Middle East		3,948			7,744			10,465			15,099			3,070
Sub Saharan Africa		2,418			5,369			7,164			9,194			2,212
India		2,303			3,654			5,783			8,626			3,169
China & North East Asia		4,950			9,557			16,497			25,965			8,633
South East Asia & Oceania		3,517			7,160			10,982			14,902			3,108
Other¹⁾ ²⁾		1,919			3,570			5,431			7,540			2,627

Total		45,112			93,084			140,565			203,348			52,966

¹⁾ Of which Sweden		1,047			2,043			3,066			4,237			927
²⁾ Of which EU		11,065			21,449			31,113			43,707			10,020


	2010												2011
Year to date, year-over-year change, percent	Jan-Mar			Jan-Jun			Jan-Sep			Jan-Dec			Jan-Mar
North America		99	%		115	%		145	%		107	%		39	%
Latin America		-9	%		-11	%		-16	%		-11	%		1	%
Northern Europe & Central Asia¹⁾ ²⁾		-20	%		-14	%		-13	%		2	%		46	%
Western & Central Europe²⁾		-3	%		-11	%		-15	%		-12	%		-8	%
Mediterranean²⁾		-17	%		-17	%		-13	%		-10	%		-5	%
Middle East		0	%		-11	%		-21	%		-17	%		-22	%
Sub Saharan Africa		-48	%		-35	%		-38	%		-40	%		-9	%
India		-43	%		-52	%		-51	%		-43	%		38	%
China & North East Asia		-15	%		-26	%		-11	%		0	%		74	%
South East Asia & Oceania		-32	%		-34	%		-30	%		-29	%		-12	%
Other¹⁾ ²⁾		-19	%		-10	%		-6	%		4	%		37	%

Total		-9	%		-8	%		-5	%		-2	%		17	%

¹⁾ Of which Sweden		-13	%		-11	%		-9	%		3	%		-11	%
²⁾ Of which EU		-12	%		-15	%		-14	%		-11	%		-9	%


Ericsson First Quarter Report 2011, April 27, 2011		27

External Net Sales by Region by Segment


Isolated quarter, SEK million Q1 2011	Networks			Global Services			Multimedia			Total
North America		9,074			3,840			248			13,162
Latin America		2,003			1,799			213			4,015
Northern Europe & Central Asia		2,404			834			127			3,365
Western & Central Europe		2,167			2,419			220			4,806
Mediterranean		2,253			2,266			280			4,799
Middle East		1,658			1,285			127			3,070
Sub Saharan Africa		1,197			840			175			2,212
India		2,284			705			180			3,169
China & North East Asia		6,469			2,052			112			8,633
South East Asia & Oceania		1,722			1,226			160			3,108
Other		2,018			169			440			2,627

Total		33,249			17,435			2,282			52,966

Share of Total		63	%		33	%		4	%		100	%

Top 5 Countries in Sales


Country	Jan - Mar 2010			Jan - Mar 2011
United States		19	%		24	%
Japan		4	%		8	%
India		5	%		6	%
China		7	%		6	%
Russian Federation		1	%		4	%


Ericsson First Quarter Report 2011, April 27, 2011		28

Provisions


	2010								2011
Isolated quarters, SEK million	Q1		Q2		Q3		Q4		Q1
Opening balance		12,431		12,064		13,061		10,937		9,744
Additions		1,777		2,416		803		1,718		1,304
Utilization/Cash out		-1,565		-1,498		-1,722		-2,369		-1,091
Of which restructuring		-677		-701		-911		-973		-762
Reversal of excess amounts		-498		-346		-417		-593		-88
Reclassification, translation difference and other		-81		425		-788		51		-340

Closing balance		12,064		13,061		10,937		9,744		9,529


	2010								2011
Year to date, SEK million	Jan-Mar		Jan-Jun		Jan-Sep		Jan-Dec		Jan-Mar
Opening balance		12,431		12,431		12,431		12,431		9,744
Additions		1,777		4,193		4,996		6,714		1,304
Utilization/Cash out		-1,565		-3,063		-4,785		-7,154		-1,091
Of which restructuring		-677		-1,378		-2,289		-3,262		-762
Reversal of excess amounts		-498		-844		-1,261		-1,854		-88
Reclassification, translation difference and other		-81		344		-444		-393		-340

Closing balance		12,064		13,061		10,937		9,744		9,529

Number of Employees


	2010								2011
End of period	Mar 31		Jun 30		Sep 30		Dec 31		Mar 31
North America		13,450		13,857		13,430		13,498		13,531
Latin America		6,134		6,150		6,353		7,181		7,394
Northern Europe & Central Asia¹⁾		21,813		21,806		21,550		21,425		21,339
Western & Central Europe		11,418		11,174		10,690		10,818		10,629
Mediterranean		10,884		10,857		10,815		10,795		10,907
Middle East		3,598		3,568		3,553		3,982		4,057
Sub Saharan Africa		2,044		1,944		1,662		1,626		1,644
India		4,726		5,408		6,086		6,710		7,448
China & North East Asia		7,400		7,668		9,223		9,807		10,111
South East Asia & Oceania		5,070		4,981		4,698		4,419		4,486

Total		86,537		87,413		88,060		90,261		91,546

¹⁾ Of which Sweden		18,082		18,070		17,942		17,848		17,771

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


	2010								2011
Isolated quarters, SEK million	Q1		Q2		Q3		Q4		Q1
Additions
Property, plant and equipment		659		1,016		1,027		984		980
Capitalized development expenses		278		724		317		325		269
IPR, brands and other intangible assets		622		521		2,490		715		359

Total		1,559		2,261		3,834		2,024		1,608

Depreciation, amortization and impairment losses
Property, plant and equipment		796		901		798		801		841
Capitalized development expenses		168		192		171		185		232
IPR, brands and other intangible assets¹⁾		2,169		1,211		1,301		1,260		1,136

Total		3,133		2,304		2,270		2,246		2,209

¹⁾ Of which restructuring costs		945		—		14		—		—


Ericsson First Quarter Report 2011, April 27, 2011		29

Other Information


	Jan - Mar				Jan - Dec
	2010		2011		2010
Number of shares and earnings per share
Number of shares, end of period (million)		3,273		3,273		3,273
Of which class A-shares (million)		262		262		262
Of which class B-shares (million)		3,011		3,011		3,011
Number of treasury shares, end of period (million)		78		70		73
Number of shares outstanding, basic, end of period (million)		3,196		3,203		3,200
Numbers of shares outstanding, diluted, end of period (million)		3,219		3,230		3,229
Average number of treasury shares (million)		78		71		76
Average number of shares outstanding, basic (million)		3,195		3,202		3,197
Average number of shares outstanding, diluted (million)¹⁾		3,219		3,229		3,226
Earnings per share, basic (SEK)		0.40		1.28		3.49
Earnings per share, diluted (SEK)¹⁾		0.39		1.27		3.46
Earnings per share (Non-IFRS), diluted (SEK)²⁾		0.87		1.52		4.80

¹⁾	Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share.

²⁾	Exclusive amortizations and write-downs of acquired intangibles.

Ratios


Days sales outstanding	117		101		88
Inventory turnover days	75		87		74
Payable days	59		70		62
Equity ratio (%)	52.8	%	53.1	%	52.1	%
Return on equity (%)	3.6	%	11.3	%	7.8	%
Return on capital employed (%)	5.0	%	13.4	%	9.6	%
Capital turnover (times)	1.0		1.2		1.1
Payment readiness, end of period	90,260		90,931		96,951
Payment readiness, as percentage of sales	50.0	%	42.9	%	47.7	%

Exchange rates used in the consolidation

SEK/EUR - average rate	10.00		8.90		9.56
- closing rate	9.72		8.93		9.02
SEK/USD - average rate	7.22		6.48		7.20
- closing rate	7.21		6.28		6.80

Other

Export sales from Sweden	20,709		34,044		100,070

Ericsson Planning Assumptions for Year 2011

Research and development expenses

We estimate R&D expenses for the full year 2011 to be at around SEK 31-33 b. The estimate includes amortizations/write-downs of intangible assets related to major acquisitions previously made. However, currency effects may cause this to change.

Capital expenditures

Excluding acquisitions, the capital expenditures in relation to sales are not expected to be significantly different in 2011, remaining at roughly two percent of sales.

Utilization of provisions

The expected utilization of provisions for year 2011 is stated in the Annual Report 2010.


Ericsson First Quarter Report 2011, April 27, 2011		30

Consolidated Operating Income excl. Restructuring Charges


	2010												2011
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1

Net sales		45,112			47,972			47,481			62,783			52,966
Cost of sales		-27,727			-29,258			-28,960			-39,795			-32,393

Gross income		17,385			18,714			18,521			22,988			20,573
Gross margin (%)		38.5	%		39.0	%		39.0	%		36.6	%		38.8	%

Research and development expenses		-7,265			-7,133			-7,221			-8,257			-7,811
Selling and administrative expenses		-5,881			-6,752			-5,731			-6,930			-6,433

Operating expenses		-13,146			-13,885			-12,952			-15,187			-14,244

Other operating income and expenses		302			500			620			581			343


Operating income before share in earnings of JV and associated companies		4,541			5,329			6,189			8,382			6,672

Operating margin before share in earnings of JV and associated companies (%)		10.1	%		11.1	%		13.0	%		13.4	%		12.6	%

Share in earnings of JV and associated companies		-260			-142			3			-304			-453

Operating income		4,281			5,187			6,192			8,078			6,219


Restructuring Charges by Function

	2010												2011
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1
Cost of sales		-800			-977			-377			-1,200			-185
Research and development expenses		-261			-619			-468			-334			-180
Selling and administrative expenses		-1,127			-404			-44			-203			-8

Subtotal Ericsson excluding Sony Ericsson and ST-Ericsson		-2,188			-2,000			-889			-1,737			-373

Share in Sony Ericsson charges		-15			-147			-27			-12			—
Share in ST-Ericsson charges		-97			-19			-66			-86			-15

Subtotal Sony Ericsson and ST-Ericsson		-112			-166			-93			-98			-15

Total		-2,300			-2,166			-982			-1,835			-388


Restructuring Charges by Segment

	2010												2011
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1
Networks		-1,450			-885			-593			-987			-205
Global Services		-680			-954			-295			-746			-166
Of which Professional Services		-588			-830			-246			-702			-145
Of which Network Rollout		-92			-124			-49			-44			-21
Multimedia		-45			-153			-1			-8			-2
Unallocated		-13			-8			—			4			—

Subtotal Ericsson excluding Sony Ericsson and ST-Ericsson		-2,188			-2,000			-889			-1,737			-373

Sony Ericsson		-15			-147			-27			-12			—
ST-Ericsson		-97			-19			-66			-86			-15

Subtotal Sony Ericsson and ST-Ericsson		-112			-166			-93			-98			-15

Total		-2,300			-2,166			-982			-1,835			-388


Ericsson First Quarter Report 2011, April 27, 2011		31

Operating Income by Segment excl. Restructuring Charges


	2010												2011
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1
Networks		2,990			3,392			4,310			5,703			5,949
Global Services		2,005			2,331			2,186			2,666			1,312
Of which Professional Services		2,007			2,161			2,171			2,577			1,631
Of which Network Rollout		-2			170			15			89			-319
Multimedia		-290			-326			-186			366			-336
Unallocated ¹⁾		-145			-119			-109			-414			-228

Subtotal Ericsson excluding Sony Ericsson and ST-Ericsson		4,560			5,278			6,201			8,321			6,697

Sony Ericsson		91			281			317			176			71
ST-Ericsson -370					-372			-326			-419			-549

Subtotal Sony Ericsson and ST-Ericsson		-279			-91			-9			-243			-478

Total		4,281			5,187			6,192			8,078			6,219


Operating Margin by Segment excl. Restructuring Charges

	2010												2011
As percentage of net sales, isolated quarters	Q1			Q2			Q3			Q4			Q1
Networks		12	%		13	%		17	%		16	%		18	%
Global Services		11	%		12	%		11	%		12	%		8	%
Of which Professional Services		15	%		15	%		16	%		15	%		13	%
Of which Network Rollout		0	%		3	%		0	%		1	%		-7	%
Multimedia		-13	%		-13	%		-8	%		11	%		-15	%

Subtotal excluding Sony Ericsson and ST-Ericsson		10	%		11	%		13	%		13	%		13	%


EBITA by Segment excl. Restructuring Charges

	2010												2011
Isolated quarters, SEK million	Q1			Q2			Q3			Q4			Q1
Networks		3,869			4,240			5,367			6,583			6,776
Global Services		2,176			2,477			2,249			2,863			1,444
Of which Professional Services		2,150			2,276			2,226			2,720			1,742
Of which Network Rollout		26			201			23			143			-298
Multimedia		-116			-109			-6			546			-161
Unallocated ¹⁾		-145			-119			-108			-412			-226

Subtotal Ericsson excluding Sony Ericsson and ST-Ericsson		5,784			6,489			7,502			9,580			7,833

Sony Ericsson		91			281			317			176			71
ST-Ericsson -370					-372			-326			-419			-549

Subtotal Sony Ericsson and ST-Ericsson		-279			-91			-9			-243			-478

Total		5,505			6,398			7,493			9,337			7,355


EBITA Margin by Segment excl. Restructuring Charges

	2010												2011
As percentage of net sales, isolated quarters	Q1			Q2			Q3			Q4			Q1
Networks		16	%		17	%		21	%		18	%		20	%
Global Services		12	%		12	%		12	%		13	%		8	%
Of which Professional Services		16	%		15	%		16	%		16	%		14	%
Of which Network Rollout		1	%		4	%		0	%		2	%		-6	%
Multimedia		-5	%		-5	%		0	%		16	%		-7	%

Subtotal excluding Sony Ericsson and ST-Ericsson		13	%		14	%		16	%		15	%		15	%

¹⁾	“Unallocated” consists mainly of costs for corporate staffs, non-operational capital gains and losses.


Ericsson First Quarter Report 2011, April 27, 2011		32

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


TELEFONAKTIEBOLAGET LM ERICSSON (publ)

By:		/s/ NINA MACPHERSON
		Nina Macpherson
		Senior Vice President and
		General Counsel

By:		/s/ HENRY STÉNSON
		Henry Sténson
		Senior Vice President
		Corporate Communications

Date: April 27, 2011

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