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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

February 2, 2007

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

 

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Announcement of LM Ericsson Telephone company, dated February 2, 2007 regarding “Ericsson reports full year pre-tax profit of SEK 36.0.b”.

 

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		Fourth quarter report 2006 February 2, 2007

Ericsson reports full year pre-tax profit of SEK 36.0 b.

 

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Net sales SEK 53.7 (45.7) b. in the quarter, full year up 17% to SEK 177.8 (151.8) b.

 

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Operating income SEK 12.2 (10.4) b. in the quarter, full year up 8% to SEK 35.8 (33.1) b.

 

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Operating margin 22.7% (22.7%) in the quarter, full year 20.1% (21.8%)

 

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Net income SEK 9.7 (8.5) b. in the quarter, full year SEK 26.3 (24.3) b.1)

 

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Earnings per share SEK 0.61 (0.54) in the quarter, full year SEK 1.65 (1.53)1)

 

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Board proposes SEK 0.50 (0.45) per share as dividend for 2006

CEO COMMENTS

“We have concluded another successful year and see continued opportunities to outpace the market,” says Carl-Henric Svanberg, President and CEO of Ericsson (NASDAQ:ERIC). “We have achieved sales of SEK 178 b., an increase of 17%, while maintaining strong margins. Through our focus on operational excellence, costs continue to grow slower than sales.

Our financial strength has enabled us to execute our strategy of organic growth and own development in combination with bolt-on acquisitions. During 2006, we successfully integrated Marconi into our operations, including reaching expected profitability. We also recently announced the acquisition of Redback Networks in a move to further enhance our strong all-IP offering.

During the year we introduced a more customer-oriented organization to further leverage our leadership and expand our market reach. By this move we enhance our abilities to serve customers needs in networks, services and multimedia. We also strengthened our platform for leadership in next-generation converging IP networks, where multimedia applications and services offer obvious business opportunities.

Sony Ericsson celebrated its fifth anniversary with an exceptional performance. Through successful product development, innovative marketing, and excellence in operations, the company achieved record results and market leadership in the high-end segments. Sony Ericsson has established a unique brand platform and successfully leveraged the assets of its parents.

We are well positioned for 2007. With our leading positions in mobile networks and professional services, substantial investments in next-generation IP networks and multimedia, we have the platform to continue to capture market share and drive the industry forward,” concludes Carl-Henric Svanberg.

FINANCIAL HIGHLIGHTS

Income statement and cash flow

 

		Fourth quarter							Third quarter					Full year
SEK b.		2006		2005		Change			20062)		Change3)			20062)		2005		Change
Net sales		53.7		45.7		18	%		40.8		32	%		177.8		151.8		17	%
Gross margin (%)		41.8		44.2		—			41.8		—			42.2		45.7		—
Operating income		12.2		10.4		18	%		8.7		39	%		35.8		33.1		8	%
Operating margin (%)		22.7		22.7		—			21.4		—			20.1		21.8		—
Income after financial items		12.2		10.1		—			8.8		—			35.9		33.3		—
Net income1)		9.7		8.5		—			6.23)		—			26.33)		24.3		—
Cash flow4)		8.9		13.5		—			3.83)		—			12.23)		19.6		—
Earnings per share, SEK1)		0.61		0.54		—			0.393)		—			1.653)		1.53		—

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1)	Attributable to stockholders of the parent company, excluding minority interest.

2)	Excluding restructuring charges of SEK 2.9 b. and capital gain of SEK 3.0 b. in third quarter 2006.

3)	Including restructuring charges of SEK 2.9 b. and capital gain of SEK 3.0 b. in third quarter 2006.

4)	Excluding acquisition of Marconi SEK 17.6 b., Netwise SEK 0.3b. and divestiture of the defense business of SEK 3.1 b. Also adjusted for the Swedish pension trust of SEK 8.3 b. in 2005.

 

1

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Sales in the quarter were up 18% year-over-year, with growth in infrastructure and services. For the full year sales were SEK 177.8 b. with a growth of 17%, positively impacted by the added Marconi sales. Growth was especially strong in professional services with a sales growth of 30% for the full year.

Gross margin, excluding restructuring charges, was stable sequentially at 41.8% (44.2%), reflecting high level of network rollout and initial network build-outs. The full year gross margin was 42.2% (45.7%), excluding restructuring charges. The strongly growing services business with its lower gross margins as well as the added Marconi business are the main reasons behind the lower gross margin.

The operating margin increased sequentially from 21.5% to 22.7% (22.7%). Operating margin, excluding amortization of Marconi intangible assets, amounted to 23.5% (22.7%) in the quarter. Full year operating margin amounted to 20.1% (21.8%), excluding restructuring charges and capital gains. The effects from the lower operating margin in the beginning of the year were partly compensated by the strong Sony Ericsson performance.

The financial net was SEK 0.0 (-0.3) b. in the quarter.

Net income in the quarter was SEK 9.7 (8.5) b. and earnings per share SEK 0.61 (0.54). For the full year net income and earnings per share amounted to SEK 26.3 (24.3) b. and SEK 1.65 (1.53) respectively.

Cash flow amounted to SEK 8.9 (13.5) b. in the quarter. This includes sequentially increasing accounts receivables, following the seasonally strong fourth quarter sales. Full year cash flow amounted to SEK 12.2 (19.6) b.

During the year two acquisitions were made, Marconi (SEK 17.6 b.) and Netwise (SEK 0.3 b.). The defense business was divested (SEK 3.1 b.).

Balance sheet and other performance indicators

 

SEK b.		Full year 2006			Nine months 2006			Six months 2006			Three months 2006			Full year 2005
Net cash		40.7			34.1			27.9			33.7			50.6
Interest-bearing provisions and liabilities		21.6			21.2			21.6			32.7			30.9
Days sales outstanding		86			105			95			101			81
Inventory turnover		5.1			4.4			4.5			4.2			5.0
Customer financing, net		3.7			4.9			4.6			3.2			4.9
Equity ratio		56.2	%		54.1	%		53.9	%		50.2	%		49.0	%

Net cash increased by SEK 6.6 b. to SEK 40.7 (50.6) b. during the quarter. The equity ratio was 56.2% (49.0%).

Days sales outstanding were 86 days with strong collections in the quarter. Inventories, including work in progress, were down in the quarter by SEK 3.6 b. to SEK 21.5 (19.2) b. and inventory turnover improved, reflecting reduction of work in progress in the field.

For the year as a whole, working capital has increased by SEK 14.0 b., reflecting our growth in emerging markets and the growing proportion of large turnkey projects.

Deferred tax assets were reduced by SEK 0.7 b. in the quarter, from SEK 14.3 b. at September 30 to SEK 13.6 b., reflecting anticipated utilization of tax loss carry forwards, net.

MARKET, BUSINESS AND TECHNOLOGY DEVELOPMENT

Market development

This year, the mobile phone celebrated its 50th anniversary and we are getting close to the point where every second person in the world has a mobile phone. Telecommunication is now reaching into regions without proper roads or electricity supplies, and contributes to economic development as well as peoples’ quality of lives.

 

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In parallel to higher penetration, the build-out of mobile and fixed broadband capabilities continues, paving the way for broadband everywhere. 2006 was a breakthrough year for mobile broadband with important commercial launches in all parts of the world. Some 100 commercial HSPA networks in over 50 countries and some 130 HSPA devices have been launched. These numbers continue to increase with new rollouts and software upgrades of existing WCDMA networks.

The fixed broadband market also showed strong development and uptake during 2006. At the end of the year, there were well above 250 million fixed broadband connections in the world, and it is expected that the penetration rate reached 5%.

As a result of the improved availability and capabilities of mobile and fixed broadband, 2006 was an important year for rich end-user services. As an example we see mobile music becoming more popular with mobile downloads in Japan outpacing the number of downloads made over the Internet. Over 120 operators worldwide have launched mobile TV and video services.

In 2006, operators’ focus on all-IP networks increased and the rapid build-out of mobile and fixed broadband networks led to the introduction of new IP-based services such as Voice over IP, Interactive TV and video-on-demand. These applications require a very high quality of service. As a consequence, networks are becoming more complex and end-to-end capabilities, telecom grade competence and professional services will be critical for suppliers.

Subscriber growth

The growth of net mobile subscriptions continued with close to 150 million in the quarter and 500 million during the year. At the end of the year, worldwide subscription penetration reached 41% with more than 2.7 billion subscriptions in total, of which more than 2.2 billion are GSM/WCDMA. The number of WCDMA subscriptions almost doubled during the year to nearly 100 million at year-end. We expect to pass three billion subscriptions during 2007.

Business achievements

The strong GSM growth is driven by the continued demand for capacity and coverage. Growth is also enhanced by CDMA operators in Latin America and Asia Pacific migrating their networks to the GSM/WCDMA track, resulting in new contract awards. Ericsson was awarded new and extension contracts in high-growth markets such as Bangladesh, China, India, Indonesia, Pakistan and Russia, as well as in countries throughout Africa and Latin America.

Due to the growing demand for mobile broadband, Ericsson is now a supplier to 44 mobile broadband networks (HSPA) launched across the world, almost every second network launched. Cingular in the US and Telstra in Australia recognized the importance of mobile broadband early on, and Ericsson rolled out their nationwide HSPA networks during 2006 in record time. Our strong position was further confirmed when operators E-mobile and Softbank in Japan, in the world’s most advanced mobile market, chose our WCDMA/HSPA solutions.

During 2006, the share of larger projects with wider scopes such as deployments on behalf of Cingular, E-mobile, Telstra and Vivo increased. Operators strive to be first to provide service everywhere and with telecom grade performance. Due to our long experience, global processes and unique local capabilities we were able to roll out 400-500 sites per week at peak periods in Australia, Brazil, India and the US respectively.

The growth in professional services amounted to 30% for the full year. As networks get more complex growth in services accelerates and Ericsson provides advanced support services, around-the-clock, to networks with more than 725 million subscribers. In addition, operators’ focus on network outsourcing is evident. Our leadership position in this field is solid with 35 new contracts announced during 2006. We now manage 100 networks with more than 100 million subscribers.

 

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Technology achievements

Technology leadership is the foundation for market leadership in this industry. During the year, our strong R&D focus has resulted in a number of technology milestones and new products such as the launches of the new multi-access GSM/WCDMA base station, the new generation WCDMA base stations and a WCDMA/HSPA indoor access point for the home.

We also performed the world’s first 28 Mbps HSPA downlink, and together with 3 Italia achieved the world’s first enhanced uplink in a commercial HSPA network. In early 2007, our customers will also be able to upgrade their commercial HSPA networks to 7.2 Mbps downlink. This will further enhance the end user experience of mobile broadband.

Our efforts to meet operator demand also in fixed broadband are paying off, and our solution for fixed broadband access (VDSL2) was named best access technology at Broadband World Forum 2006.

Ericsson’s increased efforts in next-generation IP networks, including the acquisition of Redback as well as the new organization with its increased focus on multimedia, is a strategic move to further strengthen our position in the market.

The implementation of IMS (IP Multimedia Subsystem) is an important part of next-generation networks. During the year, Ericsson signed 19 IMS contracts for commercial deployment and has additionally performed more than 30 trials. Vodafone Group also named Ericsson supplier of the year and preferred IMS supplier.

REGIONAL OVERVIEW

Western Europe sales were up by 35% compared to the same quarter last year and 24% for the full year. Voice traffic is increasing as a result of lower tariffs. Growth is primarily driven by strong services sales and high demand for transmission and fixed broadband access. HSPA is gaining traction and new multimedia offerings continue to drive data traffic.

Central and Eastern Europe, Middle East and Africa sales grew by 22% compared to the same quarter last year. Full year sales were up 23%. Countries in Africa and the Middle East are showing strong growth. There is still low penetration in large parts of the region but also a growing demand for mobile broadband.

Asia Pacific sales grew by 34% compared to the same quarter last year. Full year sales were up 42%. There was a continued high activity level throughout the region, particularly in e.g. Australia, India, Indonesia and Japan. Japan leads the world in mobile broadband development. Subscriber growth continues in China, increasing the need for 2G capacity while operators are waiting for 3G. Latin America sales declined by 20% compared to the same quarter last year. Full year sales were down 14%. Sales increased 14% sequentially, mainly driven by Central America and South Latin America. The slower market should be seen in light of last year’s very strong growth. There is, however, a continued need for investments in quality and coverage as the subscriber and traffic growth continues.

North America sales were down 22% compared to the same quarter last year. Full year sales were down 18% following the strong growth in 2005. The region is leading the way in triple play and focus on fiber-to-the-home is increasing. Recent spectrum auctions are expected to expand the market.

OUTLOOK

All estimates are measured in USD and refer to market growth compared to previous year.

The traffic growth in the world’s mobile networks is expected to continue as a result of both new services and new subscribers.

For 2006 our estimate is that the GSM/WCDMA track within the global mobile systems market, measured in USD, showed mid-single digit growth.

 

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For 2007 we believe that the GSM/WCDMA track within the global mobile systems market, measured in USD, will continue to show mid-single digit growth.

Our previous estimate for 2007 was that the GSM/WCDMA track within the global mobile systems market, measured in USD, would show moderate growth, similar to 2006.

The addressable market for professional services is expected to show good growth in 2007. With our technology leadership and global presence we are well positioned to take advantage of these market opportunities.

SEGMENT RESULTS

Systems

 

		Fourth quarter									Third quarter						Full year
SEK b.		2006			2005			Change			20061)			Change			20061)			2005			Change
Net sales		51.0			43.0			19	%		38.4			33	%		167.7			142.1			18	%
Mobile networks		37.8			33.6			12	%		28.0			35	%		123.4			112.6			10	%
Fixed networks		4.1			1.3			224	%		2.5			64	%		12.0			4.6			162	%
Professional services		9.1			8.1			12	%		7.9			15	%		32.3			24.9			30	%
Operating income		9.9			9.4			—			6.5			—			29.7			30.9			—
Operating margin		19	%		22	%		—			17	%		—			18	%		22	%		—

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1)	Excludes restructuring charges of SEK 2.9 b.

Sales in Systems were up by 19% compared to the same quarter last year. The full year sales growth in mobile networks of 10% reflects increased market share. The larger proportion of initial network build-outs reflects our strong position in the market.

Sales of fixed networks increased by SEK 2.8 b. in the quarter to SEK 4.1 b., as a result of the Marconi acquisition. Full year sales amounted to SEK 12.0 (4.6) b. The successful introduction of the combined Ericsson Marconi broadband offering has contributed to the sales increase.

Sales of network rollout and professional services increased 20%, compared to the same quarter last year. During the quarter, strong growth in network rollout continued due to a high proportion of new networks being built. Full year growth in professional services amounted to 30%.

Other Operations

 

		Fourth quarter									Third quarter						Full year
SEK b.		2006			2005			Change			20061)			Change			20061)			2005			Change
Net sales		2.9			3.0			-2	%		2.8			6	%		11.6			10.9			6	%
Operating income		0.4			0.2			—			0.2			—			0.9			0.3			—
Operating margin		14	%		7	%		—			8	%		—			8	%		3	%		—

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1)	No restructuring charges or capital gains relate to Other Operations.

Strong improvements by all units and especially in Ericsson Mobile Platforms and Enterprise. Ericsson Microwave Systems was sold during the third quarter.

SONY ERICSSON MOBILE COMMUNICATIONS

For information on transactions with Sony Ericsson Mobile Communications, please see Financial statements and additional information.

Sony Ericsson reported another record year with year-over-year volume and sales growth of over 51%. Income before tax was up 153% year-over-year. Units shipped in the quarter reached 26.0 million, a 61% increase compared to the same period last year, generating significant market share gains. Of the total shipped units of 74.8 million during the year, 60 million were music enabled, including 17 million Walkman phones.

Particularly strong growth in Latin America, Asia Pacific and Europe resulted in a market share of approximately 9% in the fourth quarter. Sony Ericsson showed good progress in its ambition to achieve a top three market position.

 

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Ericsson’s share in Sony Ericsson’s income before tax was SEK 5.9 b. for the full year, compared to SEK 2.3 b. in 2005.

PARENT COMPANY INFORMATION

Net sales for the year amounted to SEK 0.6 (1.1) b. and income after financial items was SEK 13.5 (14.0) b.

Major changes in the Parent Company’s financial position for the year include decreased current and non-current receivables from subsidiaries of SEK 31.4 b. and decreased cash and bank and short-term investments of SEK 21.0 b. Current and non-current liabilities to subsidiaries decreased by SEK 41.9 b. and current maturities of long-term borrowings decreased by SEK 9.7 b. At year-end, cash and bank and short-term investments amounted to SEK 54.0 (75.0) b.

In accordance with the conditions of the Stock Purchase Plans and Option Plans for Ericsson employees, 7,145,092 shares from treasury stock were sold or distributed to employees during the fourth quarter. The holding of treasury stock at December 31, 2006 was 251,013,892 Class B shares.

DIVIDEND PROPOSAL

The Board of Directors will propose to the Annual General Meeting a dividend of SEK 0.50 (0.45) per share, representing some SEK 7.9 (7.1) b., and April 16, 2007, as record day for payment of dividend.

ANNUAL REPORT

The annual report will be made available to shareholders at the Ericsson headquarters, Torshamnsgatan 23, Stockholm, approximately two weeks prior to the Annual General Meeting 2007.

ANNUAL GENERAL MEETING OF SHAREHOLDERS

The Annual General Meeting of shareholders will be held on April 11, 2007, 15.00 (CET) in the Stockholm Globe Arena.

OTHER INFORMATION

New group management team

As a result of the new organization, Ericsson has a new group management team as of January 1, 2007. Please visit www.ericsson.com/ericsson/corpinfo/management/index.shtml for details about the management team.

Acquisition of Redback Networks

On December 20, 2006, Ericsson and Redback Networks Inc. (NASDAQ:RBAK) announced the signing of a definitive agreement under which Ericsson would acquire Redback for USD 25.00 per share, or an aggregate price of approximately USD 1.9 billion. On January 25, 2007, the completion of the acquisition was announced.

Redback has over 700 carrier customers in more than 80 countries and employs about 800 people, including 500 R&D engineers. Fifteen of the top 20 telephone carriers worldwide use Redback’s technology, including broadband routers to manage IP-based data, voice and video services. Redback has a strong position in multi-service edge routing technology, which helps carriers deliver broadband, telephony, TV and mobility services over internet-based infrastructures.

The combination of Redback’s intelligent routing technology and Ericsson’s leading IMS (IP Multimedia Subsystem), optical transport and broadband access puts Ericsson in a leading position in end-to-end IP solutions for both fixed and mobile operators.

For additional information, please visit www.ericsson.com/press

 

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New segment reporting

As a consequence of the new organization and market development, Ericsson will review its segment reporting. The new reporting structure will be implemented as of January 1, 2007. Details of the new structure will be communicated in advance of Ericsson’s first quarterly report 2007.

Stockholm, February 2, 2007

Carl-Henric Svanberg

President and CEO

Date for next report: April 26, 2007

REVIEW REPORT

We have reviewed this report for the period January 1 to December 31, 2006, for Telefonaktiebolaget LM Ericsson (publ). Management is responsible for the preparation and presentation of this interim financial information in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim 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. 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 Standards on Auditing in Sweden, RS, 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 accompanying interim financial information is not, in all material respects, in accordance with IAS 34 and the Annual Accounts Act.

Stockholm, February 2, 2007

 

Bo Hjalmarsson		Peter Clemedtson		Thomas Thiel
Authorized Public Accountant		Authorized Public Accountant		Authorized Public Accountant
PricewaterhouseCoopers AB		PricewaterhouseCoopers AB

EDITOR’S NOTE

To read the complete report with tables, please go to:

www.ericsson.com/investors/financial_reports/2006/12month06-en.pdf

Ericsson invites media, investors and analysts to a press conference at the Ericsson headquarters, Torshamnsgatan 23, Stockholm, at 09.00 (CET), February 2.

An analyst and media conference call will begin at 14.00 (CET).

Live audio webcasts 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

FOR FURTHER INFORMATION, PLEASE CONTACT

 

Henry Sténson, Senior Vice President,				Susanne Andersson,
Communications				Investor Relations
Phone: +46 8 719 4044				Phone: +46 8 719 4631
E-mail: investor.relations@ericsson.com or				E-mail: investor.relations@ericsson.com
press.relations@ericsson.com
				Glenn Sapadin,
Investors				Investor Relations,
Gary Pinkham, Vice President,				North America
Investor Relations				Phone: +1 212 843 8435
Phone: +46 8 719 0000				E-mail: investor.relations@ericsson.com
E-mail: investor.relations@ericsson.com

 

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Media
Åse Lindskog, Director,		Ola Rembe, Director,
Head of Media Relations		Media Relations
Phone: +46 8 719 9725, +46 730 244 872		Phone: +46 8 719 9727, +46 730 244 873
E-mail: press.relations@ericsson.com		E-mail: press.relations@ericsson.com

Telefonaktiebolaget LM Ericsson (publ)

Org. number: 556016-0680

Torshamnsgatan 23

SE-164 83 Stockholm

Phone: +46 8 719 00 00

www.ericsson.com

Safe Harbor Statement of Ericsson under the 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; and (xii) plans to launch new products and services.

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) further 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 fluctuations; and (vii) the successful implementation of our business and operational initiatives.

FINANCIAL STATEMENTS AND ADDITION AL INFORMATION

 

		Page
Financial statements
Consolidated income statement		9
Consolidated balance sheet		10
Consolidated statement of cash flows		11
Consolidated statement of recognized income and expense		12
Consolidated income statement - isolated quarters		13
		Page
Additional information
Accounting policies		14
Net sales by segment by quarter		16
Operating income, operating margin and employees by segment by quarter		17
Net sales by market area by quarter		18
External net sales by market area by segment		19
Top ten markets in sales		20
Customer financing risk exposure		20
Transactions with Sony Ericsson Mobile Communications		20
Other information		21

 

8

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ERICSSON

CONSOLIDATED INCOME STATEMENT

 

		Oct - Dec									Jan - Dec
SEK million		2006			2005			Change			2006			2005			Change
Net sales		53,683			45,665			18	%		177,783			151,821			17	%
Cost of sales		-31,248			-25,497						-104,487			-82,369
Gross margin		22,435			20,168			11	%		73,296			69,452			6	%
Gross margin %		41.8	%		44.2	%					41.2	%		45.7	%
Research and development and other technical expenses		-7,238			-6,378						-27,921			-24,454
Selling and administrative expenses		-6,071			-5,332						-21,422			-16,800
Operating expenses		-13,309			-11,710						-49,343			-41,254
Other operating income		849			883						5,941			2,491
Share in earnings of JV and associated companies		2,210			1,013						5,934			2,395
Operating income		12,185			10,354			18	%		35,828			33,084			8	%
Operating margin %		22.7	%		22.7	%					20.2	%		21.8	%
Financial income		366			362						1,954			2,653
Financial expenses		-396			-643						-1,789			-2,402
Income after financial items		12,155			10,073						35,993			33,335
Taxes		-2,352			-1,435						-9,557			-8,875
Net income		9,803			8,638			13	%		26,436			24,460			8	%
Net income attributable to:
Stockholders of the parent company		9,731			8,541						26,251			24,315
Minority interest		72			97						185			145
Other information
Average number of shares, basic (million)		15,877			15,859						15,871			15,843
Earnings per share, basic (SEK) 1)		0.61			0.54						1.65			1.53
Earnings per share, diluted (SEK) 1)		0.61			0.54						1.65			1.53

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1)	Based on Net income attributable to stockholders of the parent company

 

9

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ERICSSON

CONSOLIDATED BALANCE SHEET

 

SEK million		Dec 31 2006		Sep 30 2006		Dec 311) 2005
ASSETS
Non-current assets
Intangible assets
Capitalized development expenses		4,995		5,253		6,161
Goodwill		6,824		7,075		7,362
Intellectual property rights		15,649		15,728		939
Property, plant and equipment		7,881		8,279		6,966
Financial assets
Equity in JVs and associated companies		9,409		7,623		6,313
Other investments in shares and participations		721		748		805
Customer financing, non-current		1,921		2,455		1,322
Other financial assets, non-current		2,409		2,356		2,796
Deferred tax assets		13,564		14,313		18,519
		63,373		63,830		51,183
Current assets
Inventories		21,470		25,029		19,208
Trade receivables		51,070		48,273		41,242
Customer financing, current		1,735		2,480		3,624
Other current receivables		15,012		14,825		12,574
Short-term investments		32,311		36,723		39,767
Cash and cash equivalents		29,969		18,514		41,738
		151,567		145,844		158,153
Total assets		214,940		209,674		209,336
EQUITY AND LIABILITIES
Equity
Stockholders’ equity		120,113		112,640		101,622
Minority interest in equity of consolidated subsidiaries		782		767		850
		120,895		113,407		102,472
Non-current liabilities
Post-employment benefits		6,968		5,423		5,891
Provisions, non-current		602		720		904
Deferred tax liabilities		382		406		391
Borrowings, non-current		12,904		13,623		14,185
Other non-current liabilities		2,868		3,217		2,740
		23,724		23,389		24,111
Current liabilities
Provisions, current		13,280		15,913		17,764
Borrowings, current		1,680		2,108		10,784
Trade payables		18,183		17,836		12,584
Other current liabilities		37,178		37,021		41,621
		70,321		72,878		82,753
Total equity and liabilities		214,940		209,674		209,336
Of which interest-bearing liabilities and post-employment benefits		21,552		21,154		30,860
Net cash		40,728		34,083		50,645
Assets pledged as collateral		285		374		549
Contingent liabilities		1,392		1,616		1,708

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1)	Ericsson has adopted the new option in IAS 19 as from January 1, 2006. Earlier periods have been restated accordingly.

The net effect on equity per December 31, 2005 was SEK -3,055 million.

 

10

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ERICSSON

CONSOLIDATED STATEMENT OF CASH FLOWS

 

		Oct - Dec				Jan - Dec
SEK million		2006		2005		2006		2005
Net income attributable to stockholders of the parent company		9,731		8,541		26,251		24,315
Adjustments to reconcile net income to cash		2,149		2,741		6,245		10,845
		11,880		11,282		32,496		35,160
Operating net assets
Inventories		2,972		480		-2,553		-3,668
Customer financing, current and non-current		1,242		-472		1,186		-641
Trade receivables		-4,077		475		-10,563		-5,874
Other		-1,008		3,298		-2,077		-8,308
Cash flow from operating activities		11,009		15,063		18,489		16,669
Investing activities
Product development		- 373		- 426		-1,353		-1,174
Other investing activities		-1,720		-1,133		-19,704		-4,170
Cash flow from operating investing activities		-2,093		-1,559		-21,057		-5,344
Cash flow before financial investing activities		8,916		13,504		-2,568		11,325
Short-term investments		3,136		7,707		6,180		6,375
Cash flow from investing activities		1,043		6,148		-14,877		1,031
Cash flow before financing activities		12,052		21,211		3,612		17,700
Financing activities
Dividends paid		0		- 44		-7,343		-4,133
Sale/repurchase of own stock		38		24		58		117
Other financing activities		- 309		-2,847		-8,154		-2,070
Cash flow from financing activities		- 271		-2,867		-15,439		-6,086
Effect of exchange rate changes on cash		- 326		282		58		-288
Net change in cash		11,455		18,626		-11,769		11,326
Cash and cash equivalents, beginning of period		18,514		23,112		41,738		30,412
Cash and cash equivalents, end of period		29,969		41,738		29,969		41,738

 

11

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CONSOLIDATED STATEMENT OF RECOGNIZED INCOME AND EXPENSE

 

		Jan - Dec 2006						Jan - Dec 2005
SEK million		Stock- holders’ equity		Minority interest		Total equity		Stock- holders’ equity		Minority interest		Total equity
Actuarial gains and losses related to pensions including payroll tax		440		—		440		-3,221		—		-3,221
Revaluation of other investments in shares and participations:
Fair value measurement reported in equity		-2		1		-1		-3		—		-3
Transferred to income statement at sale		—		—		—		-147		—		-147
Cash flow hedges:
Fair value remeasurement of derivatives reported in equity		4,100		—		4,100		-3,961		—		-3,961
Transferred to income statement for the period		-1,990		—		-1,990		1,404		—		1,404
Transferred to balance sheet for the period		99		—		99		—		—		—
Changes in cumulative translation effects due to changes in foreign currency exchange rates		-3,028		-91		-3,119		4,118		147		4,265
Tax on items reported directly in/or transferred from equity		-769		—		-769		1,523		—		1,523
Total transactions reported in equity		-1,150		-90		-1,240		-287		147		-140
Net income		26,251		185		26,436		24,315		145		24,460
Total income and expenses recognized for the period		25,101		95		25,196		24,028		292		24,320
Other changes in equity:
Sale of own shares		58		—		58		117		—		117
Stock Purchase and Stock Option Plans		473		—		473		242		—		242
Dividends paid		-7,141		-202		-7,343		-3,959		-174		-4,133
Stock issue, net		—		70		70		—		17		17
Business combinations		—		-31		-31		—		-342		-342

 

12

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ERICSSON

CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS

 

		2006												2005
SEK million		Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Net sales		53,683			40,758			44,166			39,176			45,665			36,245			38,444			31,467
Cost of sales		-31,248			-25,422			-25,598			-22,219			-25,497			-19,862			-20,797			-16,213
Gross margin		22,435			15,336			18,568			16,957			20,168			16,383			17,647			15,254
Gross margin %		41.8	%		37.6	%		42.0	%		43.3	%		44.2	%		45.2	%		45.9	%		48.5	%
Research and development and other technical expenses		-7,238			-7,074			-6,861			-6,748			-6,378			-6,135			-6,267			-5,674
Selling and administrative expenses		-6,071			-5,296			-5,263			-4,792			-5,332			-3,932			-3,895			-3,641
Operating expenses		-13,309			-12,370			-12,124			-11,540			-11,710			-10,067			-10,162			-9,315
Other operating income		849			3,765			817			510			883			836			425			347
Share in earnings of JV and assoc. companies		2,210			2,035			992			697			1,013			673			393			316
Operating income		12,185			8,766			8,253			6,624			10,354			7,825			8,303			6,602
Operating margin %		22.7	%		21.5	%		18.7	%		16.9	%		22.7	%		21.6	%		21.6	%		21.0	%
Financial income		366			499			567			522			362			697			881			713
Financial expenses		-396			-397			-529			-467			-643			-490			-696			-573
Income after financial items		12,155			8,868			8,291			6,679			10,073			8,032			8,488			6,742
Taxes		-2,352			-2,572			-2,559			-2,074			-1,435			-2,649			-2,693			-2,098
Net income		9,803			6,296			5,732			4,605			8,638			5,383			5,795			4,644
Net income attributable to:
Stockholders of the parent company		9,731			6,233			5,712			4,575			8,541			5,314			5,843			4,617
Minority interest		72			63			20			30			97			69			-48			27
Other information
Average number of shares, basic (million)		15,877			15,872			15,869			15,866			15,859			15,845			15,835			15,756
Earnings per share, basic (SEK)1)		0.61			0.39			0.36			0.29			0.54			0.34			0.37			0.29
Earnings per share, diluted (SEK)1)		0.61			0.39			0.36			0.29			0.54			0.33			0.37			0.29

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1)	Based on Net income attributable to stockholders of the parent company

 

13

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Accounting policies

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 International Financial Reporting Interpretations Committee (IFRIC). In this interim report we have adopted the following amendments and interpretations effective as from January 1, 2006. These amendments and interpretations have been endorsed by the EU, except for one amendment to IAS 21. That amendment is commented below under IAS 21.

IAS 19 Employee Benefits

As from January 1, 2006, Ericsson has adopted the new allowed alternative in IAS 19, Employee Benefits, on how to recognize actuarial gains and losses. The previous method to recognize actuarial gains and losses – to the extent that they fell outside the 10 percent corridor – was that they were amortized over the average remaining service time of plan participants. Instead, as from January 1, 2006, all actuarial gains and losses are recognized directly in equity, net of deferred tax, in the period they occur. Earlier reporting periods have been restated accordingly. The adoption of this new alternative has increased the provision for post-employment benefits with SEK 3.5 billion, accruals for social security with SEK 0.8 billion and has affected equity by SEK 3.1 billion net of tax as per January 1, 2006. The impact on reported equity as per January 1, 2005, is SEK 0,7 billion.

IAS 39 Financial instruments: Recognition and Measurement

Three amendments have been issued by the IASB, effective as from January 1, 2006, with earlier application encouraged.

The amendments relate to:

• Cash Flow Hedges of Forecast Intra group Transactions that permits the foreign currency risk of a highly probable intra group forecast transaction to qualify as the hedged item in a cash flow hedge. Ericsson adopted his amendment 2005.

• Fair Value Option that restricts the use of the option to designate any financial asset or any financial liability to be measured at fair value through profit and loss. The company carries loans and receivables, deposits and borrowing at amortized cost, except for specific issued bonds where the carrying value is adjusted as a result of the application of fair value hedge accounting. This amendment has therefore not had a any impact on the financial position or result for 2005 and is not expected to have any impact for 2006.

• Financial guarantee contracts that requires financial guarantee contracts to be recognized, initially at fair value and subsequently at the higher of (i) the amount determined in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and (ii) the amount initially recognized less any cumulative amortization. This amendment has not had a significant impact on the financial position or result.

IAS 21The Effects of Changes in Foreign Exchange Rates

IAS 21 has been amended in relation to the accounting treatment of Net Investments in a Foreign Operation. A monetary item that forms part of a company investment in a foreign operation should not be dependent on the currency of the monetary item. Also, the accounting should not depend on which entity within the group that conducts a transaction with the foreign operation. It is only the second amendment that is endorsed by the EU as of March 31, 2006. These amendments have not had a significant impact on the financial position or result.

IFRIC 4 Determining whether an Arrangement contains a Lease

This interpretation has not had a significant impact on the financial position and result.

 

14

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IFRIC 6 Liabilities arising from Participating in a Specific Market – Waste of Electric and Electronic Equipment

This amendment has not had a significant impact on the financial position or result.

Parent Company information

The Parent Company reports according to RR 32 “Reporting in separate financial statements”. RR 32 requires the Parent Company to use similar accounting principles as for the Group, i.e. IFRS to the extent allowed by RR 32.

Working capital

Changes in working capital are presented in the report as changes in operating net assets from the cash flow statement.

 

15

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NET SALES BY SEGMENT BY QUARTER

SEK million

 

		2006												2005
Isolated quarters		Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Systems		51,034			38,421			41,435			36,821			43,020			33,939			36,138			29,002
- Mobile networks		37,849			28,000			30,782			26,763			33,664			26,763			28,770			23,450
- Fixed networks		4,109			2,508			2,506			2,868			1,270			1,137			1,130			1,048
Total Network equipment		41,958			30,508			33,288			29,631			34,934			27,900			29,900			24,498
- Of which network rollout		7,167			4,405			4,637			5,119			5,451			3,579			3,595			2,748
Professional Services		9,076			7,913			8,147			7,190			8,086			6,039			6,238			4,504
Other Operations		2,938			2,768			3,189			2,694			3,012			2,502			2,670			2,712
Less: Intersegment sales		-289			-431			-458			-339			-367			-196			-364			-247
Total		53,683			40,758			44,166			39,176			45,665			36,245			38,444			31,467
		2006												2005
Sequential change (%)		Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Systems		33	%		-7	%		13	%		-14	%		27	%		-6	%		25	%		-21	%
- Mobile networks		35	%		-9	%		15	%		-21	%		26	%		-7	%		23	%		-19	%
- Fixed networks		64	%		0	%		-13	%		126	%		12	%		1	%		8	%		-31	%
Total Network equipment		38	%		-8	%		12	%		-15	%		25	%		-7	%		22	%		-20	%
- Of which network rollout		63	%		-5	%		-9	%		-6	%		52	%		0	%		31	%		-24	%
Professional Services		15	%		-3	%		13	%		-11	%		34	%		-3	%		38	%		-27	%
Other Operations		6	%		-13	%		18	%		-11	%		20	%		-6	%		-2	%		-18	%
Less: Intersegment sales		-33	%		-6	%		35	%		-8	%		87	%		-46	%		47	%		-63	%
Total		32	%		-8	%		13	%		-14	%		26	%		-6	%		22	%		-20	%
		2006												2005
Year over year change (%)		Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Systems		19	%		13	%		15	%		27	%		17	%		15	%		19	%		11	%
- Mobile networks		12	%		5	%		7	%		14	%		16	%		13	%		19	%		11	%
- Fixed networks		224	%		121	%		122	%		174	%		-16	%		11	%		0	%		17	%
Total Network equipment		20	%		9	%		11	%		21	%		14	%		13	%		18	%		11	%
- Of which network rollout		31	%		23	%		29	%		86	%		51	%		35	%		44	%		25	%
Professional Services		12	%		31	%		31	%		60	%		31	%		25	%		25	%		9	%
Other Operations		-2	%		11	%		19	%		-1	%		-9	%		-12	%		-5	%		11	%
Less: Intersegment sales		-21	%		120	%		26	%		37	%		-46	%		-68	%		-38	%		-43	%
Total		18	%		12	%		15	%		24	%		16	%		14	%		18	%		12	%
		2006												2005
Year to Date		0612			0609			0606			0603			0512			0509			0506			0503
Systems		167,711			116,677			78,256			36,821			142,099			99,079			65,140			29,002
- Mobile networks		123,394			85,545			57,545			26,763			112,647			78,983			52,220			23,450
- Fixed networks		11,991			7,882			5,374			2,868			4,585			3,315			2,178			1,048
Total Network equipment		135,385			93,427			62,919			29,631			117,232			82,298			54,398			24,498
- Of which network rollout		21,328			14,161			9,756			5,119			15,373			9,922			6,343			2,748
Professional Services		32,326			23,250			15,337			7,190			24,867			16,781			10,742			4,504
Other Operations		11,589			8,651			5,883			2,694			10,896			7,884			5,382			2,712
Less: Intersegment sales		-1,517			-1,228			-797			-339			-1,174			-807			-611			-247
Total		177,783			124,100			83,342			39,176			151,821			106,156			69,911			31,467
		2006												2005
YTD year over year change (%)		0612			0609			0606			0603			0512			0509			0506			0503
Systems		18	%		18	%		20	%		27	%		16	%		15	%		15	%		11	%
- Mobile networks		10	%		8	%		10	%		14	%		15	%		14	%		15	%		11	%
- Fixed networks		162	%		138	%		147	%		174	%		0	%		9	%		8	%		17	%
Total Network equipment		15	%		14	%		16	%		21	%		14	%		14	%		15	%		11	%
- Of which network rollout		39	%		43	%		54	%		86	%		40	%		35	%		35	%		25	%
Professional Services		30	%		39	%		43	%		60	%		24	%		20	%		18	%		9	%
Other Operations		6	%		10	%		9	%		-1	%		-4	%		-2	%		2	%		11	%
Less: Intersegment sales		29	%		52	%		30	%		37	%		-49	%		-51	%		-40	%		-43	%
Total		17	%		17	%		19	%		24	%		15	%		15	%		15	%		12	%

 

16

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OPERATING INCOME, OPERATING MARGIN AND EMPLOYEES

BY SEGMENT BY QUARTER

SEK million

OPERATING INCOME AND MARGIN

 

		2006												2005
Isolated quarters		Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Systems		9,937			3,617			7,237			6,033			9,391			7,122			8,155			6,217
Phones		2,247			1,974			961			670			933			653			371			300
Other Operations		401			219			221			54			212			119			-94			46
Unallocated1)		-400			2,956			-166			-133			-182			-69			-129			39
Total		12,185			8,766			8,253			6,624			10,354			7,825			8,303			6,602
		2006												2005
As percentage of net sales		Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Systems		19	%		9	%		17	%		16	%		22	%		21	%		23	%		21	%
Phones2)		—			—			—			—			—			—			—			—
Other Operations		14	%		8	%		7	%		2	%		7	%		5	%		-4	%		2	%
Total		23	%		22	%		19	%		17	%		23	%		22	%		22	%		21	%
		2006												2005
Year to date		0612			0609			0606			0603			0512			0509			0506			0503
Systems		26,824			16,887			13,270			6,033			30,885			21,494			14,372			6,217
Phones		5,852			3,605			1,631			670			2,257			1,324			671			300
Other Operations		895			494			275			54			283			71			-48			46
Unallocated1)		2,257			2,657			-299			-133			-341			-159			-90			39
Total		35,828			23,643			14,877			6,624			33,084			22,730			14,905			6,602
		2006												2005
As percentage of net sales		0612			0609			0606			0603			0512			0509			0506			0503
Systems		16	%		14	%		17	%		16	%		22	%		22	%		22	%		21	%
Phones2)		—			—			—			—			—			—			—			—
Other Operations		8	%		6	%		5	%		2	%		3	%		1	%		-1	%		2	%
Total		20	%		19	%		18	%		17	%		22	%		21	%		21	%		21	%
1)       “Unallocated” consists mainly of costs for corporate staffs and non-operational capital gains and losses 2)       Calculation not applicable
NUMBER OF EMPLOYEES
		2006												2005
Year to date		0612			0609			0606			0603			0512			0509			0506			0503
Systems		59,484			59,293			57,779			57,554			50,107			48,839			47,955			46,338
Other Operations		4,297			4,167			6,013			5,699			5,948			5,748			5,683			5,587
Total		63,781			63,460			63,792			63,253			56,055			54,587			53,638			51,925
Of which Sweden		19 094			19 403			21 129			21 108			21 178			21 238			21 358			21 175
		2006												2005
Change in percent		0612			0609			0606			0603			0512			0509			0506			0503
Systems		19	%		21	%		20	%		24	%		10	%		9	%		6	%		2	%
Other Operations		-28	%		-28	%		6	%		2	%		18	%		9	%		2	%		3	%
Total		14	%		16	%		19	%		22	%		11	%		9	%		6	%		3	%
Of which Sweden		-10	%		-9	%		-1	%		0	%		-1	%		-3	%		-5	%		-7	%

 

17

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NET SALES BY MARKET AREA BY QUARTER

SEK million

 

		2006												2005
Isolated quarters		Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Western Europe		16,844			11,362			12,485			11,247			12,522			9,555			9,902			9,961
Central and Eastern Europe, Middle East & Africa		15,225			11,702			12,908			10,466			12,459			9,404			10,376			8,672
North America		3,960			2,895			3,726			5,281			5,109			4,500			6,475			3,348
Latin America		4,803			4,206			3,819			3,652			5,980			5,115			4,429			3,551
Asia Pacific		12,851			10,593			11,228			8,530			9,595			7,671			7,262			5,935
Total		53,683			40,758			44,166			39,176			45,665			36,245			38,444			31,467
Of which Sweden		1,965			1,569			1,641			1,391			1,741			1,304			1,571			1,494
Of which EU		17,910			12,322			13,755			11,901			13,744			10,409			10,528			10,607
		2006												2005
Sequential change (%)		Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Western Europe		48	%		-9	%		11	%		-10	%		31	%		-4	%		-1	%		-24	%
Central and Eastern Europe, Middle East & Africa		30	%		-9	%		23	%		-16	%		32	%		-9	%		20	%		-14	%
North America		37	%		-22	%		-29	%		3	%		14	%		-31	%		93	%		20	%
Latin America		14	%		10	%		5	%		-39	%		17	%		15	%		25	%		-21	%
Asia Pacific		21	%		-6	%		32	%		-11	%		25	%		6	%		22	%		-34	%
Total		32	%		-8	%		13	%		-14	%		26	%		-6	%		22	%		-20	%
Of which Sweden		25	%		-4	%		18	%		-20	%		34	%		-17	%		5	%		-19	%
Of which EU		45	%		-10	%		16	%		-13	%		32	%		-1	%		-1	%		-24	%
		2006												2005
Year over year change (%)		Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Western Europe		35	%		19	%		26	%		13	%		-4	%		-2	%		7	%		26	%
Central and Eastern Europe, Middle East & Africa		22	%		24	%		24	%		21	%		24	%		11	%		31	%		21	%
North America		-22	%		-36	%		-42	%		58	%		82	%		35	%		31	%		-24	%
Latin America		-20	%		-18	%		-14	%		3	%		33	%		40	%		28	%		24	%
Asia Pacific		34	%		38	%		55	%		44	%		7	%		16	%		3	%		2	%
Total		18	%		12	%		15	%		24	%		16	%		14	%		18	%		12	%
Of which Sweden		13	%		20	%		4	%		-7	%		-5	%		-11	%		2	%		11	%
Of which EU		30	%		18	%		31	%		12	%		-2	%		4	%		4	%		30	%
		2006												2005
Year to date		0612			0609			0606			0603			0512			0509			0506			0503
Western Europe		51,938			35,094			23,732			11,247			41,940			29,418			19,863			9,961
Central and Eastern Europe, Middle East & Africa		50,301			35,076			23,374			10,466			40,911			28,452			19,048			8,672
North America		15,862			11,902			9,007			5,281			19,432			14,323			9,823			3,348
Latin America		16,480			11,677			7,471			3,652			19,075			13,095			7,980			3,551
Asia Pacific		43,202			30,351			19,758			8,530			30,463			20,868			13,197			5,935
Total		177,783			124,100			83,342			39,176			151,821			106,156			69,911			31,467
Of which Sweden		6,566			4,601			3,032			1,391			6,110			4,369			3,065			1,494
Of which EU		55,888			37,978			25,656			11,901			45,288			31,544			21,135			10,607
		2006												2005
YTD year over year change (%)		0612			0609			0606			0603			0512			0509			0506			0503
Western Europe		24	%		19	%		19	%		13	%		5	%		9	%		16	%		26	%
Central and Eastern Europe, Middle East & Africa		23	%		23	%		23	%		21	%		22	%		21	%		27	%		22	%
North America		-18	%		-17	%		-8	%		58	%		26	%		13	%		5	%		-24	%
Latin America		-14	%		-11	%		-6	%		3	%		32	%		31	%		26	%		24	%
Asia Pacific		42	%		45	%		50	%		44	%		7	%		7	%		2	%		1	%
Total		17	%		17	%		19	%		24	%		15	%		15	%		15	%		12	%
Of which Sweden		7	%		5	%		-1	%		-7	%		-1	%		1	%		6	%		11	%
Of which EU		23	%		20	%		21	%		12	%		7	%		11	%		15	%		30	%

 

18

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EXTERNAL NET SALES BY MARKET AREA BY SEGMENT

SEK million

 

Oct - Dec 2006		Systems			Share of Systems			Other			Share of Other			Total			Share of Total
Western Europe		15,158			30	%		1,686			66	%		16,844			32	%
Central and Eastern Europe, Middle East & Africa		14,863			29	%		362			14	%		15,225			28	%
North America		3,861			8	%		99			4	%		3,960			7	%
Latin America		4,729			9	%		74			3	%		4,803			9	%
Asia Pacific		12,510			24	%		341			13	%		12,851			24	%
Total		51,121			100	%		2,562			100	%		53,683			100	%
Share of Total		95	%					5	%					100	%
Oct - Dec 2005
Western Europe		10,714			25	%		1,808			69	%		12,522			28	%
Central and Eastern Europe, Middle East & Africa		12,180			28	%		279			11	%		12,459			27	%
North America		4,902			11	%		207			8	%		5,109			11	%
Latin America		5,923			14	%		57			2	%		5,980			13	%
Asia Pacific		9,318			22	%		277			10	%		9,595			21	%
Total		43,037			100	%		2,628			100	%		45,665			100	%
Share of Total		94	%					6	%					100	%
Change
Western Europe		41	%					-7	%					35	%
Central and Eastern Europe, Middle East & Africa		22	%					30	%					22	%
North America		-21	%					-52	%					-22	%
Latin America		-20	%					30	%					-20	%
Asia Pacific		34	%					23	%					34	%
Total		19	%					-3	%					18	%
Year to date
Jan - Dec 2006
Western Europe		45,396			27	%		6,542			64	%		51,938			29	%
Central and Eastern Europe, Middle East & Africa		48,699			29	%		1,602			16	%		50,301			28	%
North America		15,250			9	%		612			6	%		15,862			9	%
Latin America		16,234			10	%		246			2	%		16,480			9	%
Asia Pacific		41,991			25	%		1,211			12	%		43,202			25	%
Total		167,570			100	%		10,213			100	%		177,783			100	%
Share of Total		94	%					6	%					100	%
Jan - Dec 2005
Western Europe		35,822			25	%		6,118			64	%		41,940			28	%
Central and Eastern Europe, Middle East & Africa		39,733			28	%		1,178			12	%		40,911			27	%
North America		18,774			13	%		658			7	%		19,432			13	%
Latin America		18,834			13	%		241			2	%		19,075			12	%
Asia Pacific		29,013			21	%		1,450			15	%		30,463			20	%
Total		142,176			100	%		9,645			100	%		151,821			100	%
Share of Total		94	%					6	%					100	%
Change
Western Europe		27	%					7	%					24	%
Central and Eastern Europe, Middle East & Africa		23	%					36	%					23	%
North America		-19	%					-7	%					-18	%
Latin America		-14	%					2	%					-14	%
Asia Pacific		45	%					-16	%					42	%
Total		18	%					6	%					17	%

 

19

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TOP 10 MARKETS IN SALES

Jan - Dec 2006

 

Sales		YTD Share of total sales			Q4 Share of iso. total sales
UNITED STATES		8	%		6	%
CHINA		7	%		6	%
ITALY		6	%		6	%
UNITED KINGDOM		6	%		7	%
SPAIN		5	%		6	%
AUSTRALIA		4	%		3	%
INDIA		4	%		4	%
SWEDEN		4	%		4	%
BRAZIL		3	%		3	%
INDONESIA		3	%		3	%

CUSTOMER FINANCING RISK EXPOSURE

 

SEK billion		Dec 31 2006		Sep 30 2006		Jun 30 2006		Mar 31 2006		Dec 31 2005
On-balance sheet customer financing		4.3		6.0		5.7		4.6		7.0
Less third-party risk coverage		-0.3		-0.3		-0.2		-0.2		-0.2
Accrued interest		0.1		0.1		0.1		0.1		0.1
Off-balance sheet customer financing		0.0		0.1		0.1		0.1		0.1
Ericsson customer financing risk exposure		4.1		5.9		5.7		4.6		7.0
On-balance sheet customer financing, net book value		3.7		4.9		4.6		3.2		4.9
Credit commitments for customer financing		6.8		6.1		6.4		5.5		3.6

TRANSACTIONS WITH SONY ERICSSON MOBILE COMMUNICATIONS

 

		Oct - Dec				Jan - Dec
SEK million		2006		2005		2006		2005
Revenues from Sony Ericsson		1,198		771		3,964		2,396
Purchases from Sony Ericsson		62		138		173		827
Receivables from Sony Ericsson		479		197		479		197
Liabilities to Sony Ericsson		108		33		108		33
Dividends from Sony Ericsson		—		—		1,160		—

 

20

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ERICSSON

OTHER INFORMATION

 

		Oct - Dec						Jan - Dec
SEK million		2006			2005			2006			2005
Number of shares and earnings per share
Number of shares, end of period (million)		16,132			16,132			16,132			16,132
Number of treasury shares, end of period (million)		251			268			251			268
Number of shares outstanding, basic, end of period (million)		15,881			15,864			15,881			15,864
Numbers of shares outstanding, diluted, end of period (million)		15,953			15,927			15,953			15,927
Average number of treasury shares (million)		256			273			262			289
Average number of shares outstanding, basic (million)		15,877			15,859			15,871			15,843
Average number of shares outstanding, diluted (million) 1)		15,949			15,923			15,943			15,907
Earnings per share, basic (SEK)		0.61			0.54			1.65			1.53
Earnings per share, diluted (SEK)1)		0.61			0.54			1.65			1.53
Ratios2)
Equity ratio, percent		—			—			56.2	%		49.0	%
Capital turnover (times)		1.6			1.4			1.3			1.2
Accounts receivable turnover (times)		4.3			4.4			3.9			4.1
Inventory turnover (times)		5.4			5.2			5.1			5.0
Return on equity, percent		33.4	%		35.2	%		23.7	%		26.7	%
Return on capital employed, percent		36.2	%		33.1	%		27.4	%		28.7	%
Days Sales Outstanding		—			—			86			81
Payment readiness, end of period		—			—			67,454			78,647
Payment readiness, as percentage of sales		—			—			37.9	%		51.8	%
Exchange rates used in the consolidation
SEK / EUR - average rate		—			—			9.27			9.28
- closing rate		—			—			9.04			9.42
SEK / USD - average rate		—			—			7.38			7.45
- closing rate		—			—			6.85			7.93
Other
Additions to property, plant and equipment		929			1,091			3,827			3,365
- Of which in Sweden		288			233			999			965
Additions to capitalized development expenses		373			426			1,353			1,174
Capitalization of development expenses, net		-258			-301			-1,166			-1,930
Amortization of development expenses		631			727			2,519			3,104
Depreciation of property, plant and equipment and amortization of other intangible assets		1,436			665			4,997			2,698
Total depreciation and amortization		2,067			1,392			7,516			5,802
Export sales from Sweden		26,039			24,013			98,694			93,879

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

2)	Ratios restated in accordance with new option in IAS 19

 

21

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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.

 

Date: February 2, 2007