Ericsson reports second quarter results

- Sales SEK 52.1 (48.5) b, up 11% in comparable units, down 3% currency adjusted
- Operating income 1) before JVs SEK 6.9 (4.7) b, incl capital gains of SEK 0.8 (0.2) b
- Operating margin 1) before JVs 11.7% (9.3%), excl capital gains
- Share in earnings from JVs SEK -2.1 (0.1) b
- Income after financial items1) SEK 4.8 (4.7) b
- Restructuring charges of SEK 3.6 (1.8) b, excl JV
- Net income SEK 0.8 (2.0) b
- Earnings per share SEK 0.26 (0.60)
- Cash flow 2) SEK 9.9 (8.7) b

1) Excluding restructuring charges
2) Excluding cash outlays for restructuring of SEK 0.8 (0.2) b

CEO COMMENTS

"There are different trends in the current market environment. The effects of the global economic climate on the mobile infrastructure market are now more notable, especially in markets with currencies under pressure and tougher credit environment," said Carl-Henric Svanberg, President and CEO of Ericsson (NASDAQ:ERIC). "At the same time the consumer demand for new services and broadband capabilities are quickly accelerating and rollout of new technologies is ongoing in the world's leading economies. There is also an increasing demand for professional services from operators across the world.

Network sales were down year-over-year currency adjusted, reflecting the present market environment. The continued strong acceleration of mobile data traffic is leading to high growth in sales of WCDMA and transmission as well as upgrades of IP networks. Meanwhile, GSM buildouts, primarily ongoing in emerging markets, have slowed and offset sales growth in other areas.

Services in total now represent 38% of sales, driven by strong Professional Services growth. Our leading position was confirmed by our first managed services contract in Africa with Zain and the network services contract with Sprint in the US. In the present economic climate, where operators focus on efficiency and cost reductions, Ericsson is benefiting from its sizeable services operation with both scale and global presence.

Our early decision to reduce costs is giving results and margins improved across all segments. Our target to reduce costs by SEK 10 b. from the second half of 2010 remains, and significant restructuring charges were made in the quarter. We continue to focus on our capital structure and have added long-term loans on
favorable conditions. Our net cash position was further strengthened by a strong cash flow in the quarter," concluded Carl-Henric Svanberg.

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