23 april 2010...› LG-Ericsson JV in Korea – Acquisition of Nortel’s stake, USD 242 m › Cooperation with Datang on mobile technology – Research, development and commercial

first QUARTER 2010

23 april 2010

HENRY STÉNSONSENIOR VICE PRESIDENT COMMUNICATIONS

first QUARTER 2010

THIS PRESENTATION CONTAINS FORWARD LOOKING STATEMENTS. SUCH STATEMENTS ARE BASED ON OUR CURRENT EXPECTATIONS AND ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD NEGATIVELY AFFECT OUR BUSINESS. PLEASE READ OUR EARNINGS REPORTS AND OUR MOST RECENT ANNUAL REPORT FOR A BETTER UNDERSTANDING OF THESE RISKT AND UNCERTAINTIES.

© Telefonaktiebolaget LM Ericsson 2010 | FIRST QUARTER REPORT 2010 | April 23, 2010

Changes

in external

reporting

› Change in segments–

Network Rollout moved to segment Global Services–

All other segments unchanged

› Change in geographical breakdown–

10 regions replacing 5 markets

› EBITA replaces EBITDA› Top 5 countries

HANS VESTBERGPRESIDENT AND CEO


Q1

trends

Network quality and efficiency discussions in markets with strong data traffic uptake

Operators in developingmarkets still cautious

Varied operator investment activities alsothis quarter


RECENT

EVENTS

› LG-Ericsson JV in Korea–

Acquisition of Nortel’s stake, USD 242 m

› Cooperation with Datang on mobile technology–

Research, development and commercial cooperation on TDD

› USD 1.8 b frame agreements in China–

China Unicom and China Mobile

› USD 1.3 b network expansion contract in India with Bharti–

Expansion and upgrade of Airtel’s network

› Strong Q1 performance in Sony Ericsson–

Return to profitability


0

10

20

30

40

50

60

70

80

2006 2007 2008 2009 2010

NET

SALES

› Good development in Global Services and CDMA

› Lower sales in Networks and Multimedia

› Tight industry component supply impacted sales SEK b

Comparable units

Y/Y: -16%

Net salesQ110Y/Y

SEK 45.1-9%

Q1 Q2 Q3 Q4


Adjusted

operating income and margin

› Gross margin improved – business mix and efficiency gains› Operating margin stable YoY despite lower sales

Operating income excl JVs

Q110 SEK 4.5 bQ109 SEK 4.7 b

Operating margin excl JVs

Q110 10%Q109 10%

All numbers excl. restructuring charges and JVsExcl. capital gain of SEK 0.8 b. for divestment of Symbian shares Q4 2008 and SEK 0.8 b for divestment of TEMS Q2 2009

EBITA margin

SEK b

Operating margin

0

1

2

3

4

5

6

7

8

9

10

2006 2007 2008 2009 20100%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

REGIONAL COMMENTS


Q1

Regional sales

split

North America21%

9% Latin America

5% Northern Europe and Central Asia

India 5%

Sub-Saharan Africa 5%

9%Middle East

11%Mediterranean

12%Western and Central Europe

China and North East Asia 11%

Other4%South East Asia and Oceania

8%

SEK 45.1 b

SEK206.4 b

2009

11,6%

9,7%

5,8%

10,9%

12,2%

2010 Q1

8,8%7,4%

7,3%

12,6%

10,1%3,5%


Regional

sales

comments

North America

• Very strong data traffic increase• Further strengthened position

Northern Europe & Central Asia

• Mobile broadband and modernization of fixed networks

• Central Asia still low investment levels

Western and Central Europe

• Services strong• LTE and network modernization

Mediterranean

• Mobile broadband• Operator focus on efficiency

Latin America

• 3G auctions planned• Good momentum in services

+99% YoY+1% QoQ

-3% YoY-15% QoQ

-9% YoY-32% QoQ

-20% YoY-34% QoQ

-17% YoY-28% QoQ


0123456789

10

2006 2007 2008 2009 2010

North

america

› 4G/LTE contract with AT&T› Integration of acquired

CDMA assets well on track› Nortel GSM business

acquired› Sprint in full operation from

Q409

SEK b

SEK b

Q1 Q2 Q3 Q4

MULTIMEDIA GLOBAL SERVICES NETWORKS

0

1

2

3

4

5

6

7

8

9

10

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2007 2008 2009 2010


Regional sales

comments

Middle East

• Mixed development• Networks declined – good development in services

China and North East Asia

• Tough comparison YoY• Cooperation with Datang on TDD• LG-Ericsson JV in Korea• China frame agreements USD 1.8 b

Sub-SaharanAfrica

•Still impacted by economic climate•Operator consolidation

India

•Investments slow pending 3G auctions•Bharti USD 1.3 b agreement

South East Asia and Oceania

• Cautious operator investments in many markets

• Uncertainty around 3G licences in Bangladesh and Thailand

+-0% YoY-22% QoQ

-43% YoY-33% QoQ

-15% YoY-33% QoQ

-32% YoY-32% QoQ

-48% YoY-37% QoQ


0

1

2

3

4

5

6

2006 2007 2008 2009 2010

Sub-Saharan

Africa

› Impacted by economic climate

› 2G rollouts in focus – 3G picking up from low levels

› Increasing demand for services

› Revenue management slow in the region

SEK b

SEK bMULTIMEDIA GLOBAL SERVICES NETWORKS

Q1 Q2 Q3 Q4

0

1

2

3

4

5

6

7

8

9

10

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2007 2008 2009 2010

SEGMENTS


networks

All numbers excl. restructuring charges

SEK b

SalesY/Y -14%Q/Q -22%

EBITA marginQ110 16%Q109 14%

Q409 19%

› Sales positively impacted by acquired CDMA assets› Tight industry component supply – more than offset by CDMA sales› Continued decline in voice related sales› Good growth in 3G sales› EBITA positively impacted by efficiency gains, product mix, software

0

5

10

15

20

25

30

35

40

45

50

2006 2007 2008 2009 20100%

5%

10%

15%

20%

25%

30%


global

services

› Professional Services sales +4% YoY, local currencies +12%› Managed Services sales +17% YoY, 16 contracts signed› Network Rollout sales +3% YoY› Global Services EBITA positively impacted from efficiency gains

and improved Network Rollout margins

All numbers excl. restructuring charges2Q2009 adjusted for divestment of TEMS

SalesY/Y +3%Q/Q -22%

EBITA marginQ110 +12%Q109 +10%Q409 +10%

SEK b

Network Rollout

Managed Services

Professional Services excl. Managed Services

0

4

8

12

16

20

24

2006 2007 2008 2009 20100%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Global Services EBITA

Professional Services EBITA


global

services

>40,000service professionals

410 msubscribers managed networks

2bsubscribers under support


multimedia

› Slower revenue management sales in developing markets – Sub-Saharan Africa, Middle East, South East Asia and Oceania

› Somewhat slower IPX sales› Good development for TV› EBITA declined due to lower volumes

SEK b

All numbers excl. restructuring charges and adjusted for divestment of mobile platforms and PBX business in 2008Q42008 excl. capital gain of SEK 0.8 b. for divestment of Symbian shares

SalesY/Y -29%Q/Q -31%

EBITA marginQ110 -5%Q109 +8%Q409 17%

0

1

2

3

4

5

6

2008 2009 2010-20%

-10%

0%

10%

20%

30%


› Sony Ericsson–

Sales of EUR 1,405 (1,736) m, down -20% sequentially

–

NIBT EUR 21 (-358) m, up from EUR -40 m in Q4

–

Reduced operating expenses

–

Successful new products

Joint ventures

Q1

› ST-Ericsson–

Sales of USD 606 (562) m, down -18% sequentially

–

Adjusted operating income USD -114 (-149) m

–

Restructuring plans on track

JAN FRYKHAMMARCFO and EXECUTIVE VICE PRESIDENt

FINANCIAL OVERVIEW


Q1

financial

highlights› Improved gross margin due to efficiency gains and product mix› Operating margin stable YoY – despite lower sales› Significant improvement in share in earnings of JVs› Cash flow from operations increased due to focus on capital efficiency

First quarter Fourth quarterSEK b. 2010 2009 Change 2009 Change

Sales 45.1 49.6 -9% 58.3 -23%

Gross margin 39% 36% - 35% -

Operating income excl JVs 4.5 4.7 -4% 7.5 -39%

Share in earnings of JVs -0.3 -2.2 - -0.4 -

Net income 1.3 1.8 -30% 0.7 76%

EPS, diluted SEK 0.39 0.54 - 0.10 -

Cash flow from operations 2.3 -2.9 - 12.5 -

All numbers, excl. EPS, Net income and Cash flow from operations, excl. restructuring charges.


DEBT MATURITY

PROFILE

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2010 2011 2012 2013 2014 2015 2016 2017-

Notes and Bonds Other financial liabilities EIB SEK /EKN MTN Bond

SEK b

› No maturities within two years, thereafter even distribution over time

Undrawn back-up facility of USD 2 b available.

Maturing in July 2014. Not shown in this chart.


40

45

50

55

60

65

70

75

80

85

90

Gross Cash0912A

Net Incomereconciled to

cash

Change in Netoperating

assets (excl.restructuring)

Restructuring Investingactivities

Financingactivities

FX on cash Gross Cash1003A

Change in gross cash SEK +1.1b Change in gross cash SEK +1.1b

Change

in Gross Cash Q1 2010

77.976.7Adjusted cash flow SEK 3.0 b.

Operating Cash Flow 2.3 b b Investing -1.1 bb Financial -0.1 bb FX -0.0 bb

Change in net cash SEK +2.4 bFrom SEK 36.1 b to 38.5 b

Dividend SEK 6.4 b paid in Q2

Pension Trust Capitalizations-0.9 b

SEK b


Balance

sheet

and ratios

SEK b.Mar 31

2010Dec 31

2009Sep 30

2009Jun 30

2009Mar 31

2009

Trade receivables 62.7 66.4 62.4 69.4 75.2

Days sales outstanding 117 106 118 121 124

Inventory 24.1 22.7 26.8 29.0 30.7

Inventory days 75 68 77 78 83

Payable days 59 57 57 59 65

Return on capital employed 5% 4% 4% 5% 7%

Equity ratio 53% 52% 52% 51% 52%

› DSO improved YoY due to continued focus on capital efficiency› Inventory increased due to seasonal build-up› Return on capital employed still low due to restructuring› Continued healthy equity ratio


Cost

reduction

program

› Original plan announced January 2009–

Total savings 2009 to mid 2010 estimated to SEK 15-16 b

› Total restructuring charges now estimated to SEK 15 b–

Approx SEK 1.5 b remains–

Restructuring charges SEK 2.2 b for Q1 2010–

Cash outlays of SEK 4.2 b remain to be made

› Cash outlays also after completion of program in Q2

Please note that not all restructuring charges lead to cash out


FOCUS

AREAS

GROW FASTER THAN THE MARKET

BEST IN CLASS MARGINS

STRONG CASH CONVERSION

GROWTH IN JV EARNINGS

First quarter

2010Q & A

Documents

23 april 2010...› LG-Ericsson JV in Korea – Acquisition of Nortel’s stake, USD 242 m › Cooperation with Datang on mobile technology – Research, development and commercial