January 25, 2010, 07:29 (CET)
· Sales in quarter SEK 58.3 (67.0) b, -16% for comparable units
· Sales full year SEK 206.5 (208.9) b, stable for comparable units
· Operating income 1) excl JVs SEK 7.5 (9.0) 2) b, full year SEK 24.6 (23.4) b· Operating margin 1) excl JVs 13% (13%) 2), full year 12% (11%)

· Share in earnings of JVs 1) SEK -0.4 (-0.6) b, full year SEK -6.1 (0.4) b
· Income after financial items 1) SEK 6.7 (9.5) b, full year SEK 18.8 (24.8) b
· Restructuring charges excl JV of SEK 4.3 (2.3) b, full year SEK 11.3 (6.7) b
· Net income SEK 0.7 (4.1) b, full year SEK 4.1 (11.7) b
· Earnings per share SEK 0.10 (1.21), full year SEK 1.14 (3.52)
· Cash flow 3) SEK 13.6 (7.9) b, full year SEK 28.7 (22.1) b
· The Board of Directors proposes dividend of SEK 2.00 (1.85) per share
1) Excluding restructuring charges
2) Excluding capital gain of SEK 0.8 b from divested Symbian shares in the fourth quarter 2008
3) Excluding cash outlays for restructuring cost that has been provided for of SEK 1.1 (1.0) b and dividends from Sony Ericsson of SEK 3.6 b for the full year 2008

CEO COMMENTS
"During the second half of 2009, Networks' sales were impacted by reduced operator spending in a number of markets. Group sales for the full year were less affected and the operating margin increased slightly," says Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC). "We maintained market shares well in all segments, cash flow was good and our financial position is strong. The services business performed well, and our joint ventures remain on track to return to profit.

The shift from voice telephony to mobile broadband investments continues. Users and traffic are increasing rapidly and will eventually connect billions of people to the internet. As previously stated, with this shift follows the anticipated decline in GSM sales, accelerated by the current economic climate, which is not yet offset by the growth in mobile broadband and investments in next-generation IP networks.

Current operator investment behavior varies between regions and countries. During 2009, operators in a number of developing markets, especially Central Europe, Middle East and Africa, became increasingly cautious with investments. Meanwhile, other markets including China, India and the US continued to show good development with major network buildouts. There is also a continued strong demand for services targeting the operational efficiency of operators, such as managed services and consulting.

During the year, we significantly strengthened our position in North America with key wins in both our networks and services businesses such as LTE to Verizon and Metro PCS and services to Sprint. The confidence TeliaSonera has shown in us by selecting our LTE solutions in the beginning of this year further confirms the technical quality of our solutions and strong services portfolio.

For 2010 we are determined to increase our efforts to combine our strong technology leadership position and service capabilities to provide value to our customers and ensure our continued healthy financial development," concludes Hans Vestberg.

FINANCIAL HIGHLIGHTS
Income statement and cash flow
Fourth quarter Third quarter Full year
SEK b. 2009 2008 Change 2009 Change 2009 2008 Change
Net sales 58.3 67.0 -13% 46.4 26% 206.5 208.9 -1%
Net sales for
comparable units 55.6 65.9 -16% 46.4 20% 203.8 203.7 0%
Gross margin 35% 35% - 36% - 36% 37% -
EBITDA margin
excl JVs 17% 16%1) - 16% - 16% 15% -
Operating income
excl JVs 7.5 9.0 1) -16% 5.5 37% 24.6 23.4 5%
Operating margin
excl JVs 13% 13%1) - 12% - 12% 11% -
Income after
financial items 6.7 9.5 -30% 4.0 68% 18.8 24.8 -24%
Net income 0.7 4.1 -82% 0.8 -6% 4.1 11.7 -65%
EPS diluted, SEK 0.10 1.21 -92% 0.25 -60% 1.14 3.52 -68%
Adjusted cash flow2) 13.6 7.9 - 6.9 - 28.7 22.1 -
Cash flow from
operations 12.5 7.0 - 5.7 - 24.5 24.0 -
All numbers, excl. EPS, Net income and Cash flow from operations, excl. restructuring charges

1) Excluding a capital gain of SEK 0.8 b. from divested Symbian shares in the fourth quarter 2008

2) Cash flow from operations excl. restructuring cash outlays that has been provided for. Cash outlays in the quarter of SEK 1.1 (1.0) b. For the full year, cash outlays of SEK 4.2 (1.8) b and dividends from Sony Ericsson of SEK 3.6 b for 2008 are excluded

Sales in the quarter were -16% lower year-over-year for comparable units, i.e. excluding Ericsson Mobile Platforms and the acquired Nortel CDMA and LTE business in North America, and decreased -20% adjusted also for currency exchange rate effects and hedging. The acquired Nortel business contributed sales of SEK 2.7 b. in the quarter. The fourth quarter 2008 was comparatively strong and was also affected by net positive currency exchange rate effects.

For the full year, sales for comparable units were stable but decreased -9% adjusted for currency exchange rate effects and hedging. Decreased sales in Networks were not fully offset by increased sales in Professional Services.

The gross margin was down slightly sequentially due to product mix and effects from the reduced scope in a managed services agreement in Italy and the Sprint contract. Gross margin year-over-year was flat in the quarter as well as for the full year, affected by a higher proportion of services as well as efficiency gains and restructuring effects.

Operating expenses amounted to SEK 14.0 (15.3) b. in the quarter, excluding restructuring charges. This includes operating expenses from the acquired Nortel business. The year-over-year reduction is primarily a result of ongoing cost reduction activities, offsetting negative impact from currency exchange rate effects. Full year operating expenses amounted to SEK 52.9 (56.3) b., also positively affected by the ongoing cost reduction activities.

Other operating income and expenses were SEK 0.9 (1.5) b. in the quarter.

Operating income, excluding joint ventures and restructuring charges, amounted to SEK 7.5 (9.0) b. in the quarter, including positive contribution from the acquired Nortel business. Operating margin was 13% (13%) in the quarter, despite lower year-over-year sales and was flat sequentially as a result of the ongoing cost reduction activities.

For the full year, operating income, excluding joint ventures and restructuring charges, amounted to SEK 24.6 (23.4) b. and the margin was stable 12% (11%) despite lower volumes.

Ericsson's share in earnings of joint ventures amounted to SEK -0.4 (-0.6) b. in the quarter excluding restructuring charges, compared to SEK -1.5 b. in the third quarter. This is a significant sequential improvement from ongoing efficiency programs and improved sales and margins in Sony Ericsson. Restructuring charges in joint ventures were SEK 1.0 b in the quarter. For the full year, Ericsson's share in earnings of joint ventures amounted to SEK -6.1 (0.4) b., excluding restructuring charges.

Financial net was SEK -0.4 (0.3) b. in the quarter, mainly due to lower interest rates and negative currency revaluation effects on financial assets and liabilities.

The tax rate for 2009 was 34% (32%) mainly due to a lower tax percentage rate from the loss making joint venture companies. The tax rate excluding Sony Ericsson and ST-Ericsson was 26%.

Net income amounted to SEK 0.7 (4.1) b. in the quarter. For the full year, net income was SEK 4.1 (11.7) b. and earnings per share were SEK 1.14 (3.52).

Adjusted cash flow amounted to SEK 13.6 (7.9) b. in the quarter, up sequentially from SEK 6.9 b. Adjusted cash flow for the full year amounted to SEK 28.7 (22.1) b., reflecting focus on capital efficiency. Full year cash conversion rate was 117% (92%).

Trade receivables increased by SEK 4.0 b in the quarter to SEK 66.4 (62.4) b., impacted by seasonally higher sales. Despite the higher sales, days sales outstanding (DSO) improved sequentially to 106 (118) days, mainly due to strong collections.

Inventory was reduced by SEK -4.1 b. in the quarter to SEK 22.7 (26.8) b. and turnover improved sequentially to 68 (77) days, mainly due to customary year-end project completions.