Ericsson reports fourth quarter results

(Thomson Reuters ONE) - ·   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 thefourth quarter 2008(3)) Excluding cash outlays for restructuring cost that has been provided for ofSEK 1.1 (1.0) b and dividends from Sony Ericsson of SEK 3.6 b for the full year2008CEO COMMENTS"During the second half of 2009, Networks' sales were impacted by reducedoperator spending in a number of markets. Group sales for the full year wereless affected and the operating margin increased slightly," says Hans Vestberg,President and CEO of Ericsson (NASDAQ:ERIC). "We maintained market shares wellin all segments, cash flow was good and our financial position is strong. Theservices business performed well, and our joint ventures remain on track toreturn to profit.The shift from voice telephony to mobile broadband investments continues. Usersand traffic are increasing rapidly and will eventually connect billions ofpeople to the internet. As previously stated, with this shift follows theanticipated decline in GSM sales, accelerated by the current economic climate,which is not yet offset by the growth in mobile broadband and investments innext-generation IP networks.Current operator investment behavior varies between regions and countries.During 2009, operators in a number of developing markets, especially CentralEurope, Middle East and Africa, became increasingly cautious with investments.Meanwhile, other markets including China, India and the US continued to showgood development with major network buildouts. There is also a continued strongdemand for services targeting the operational efficiency of operators, such asmanaged services and consulting.During the year, we significantly strengthened our position in North Americawith key wins in both our networks and services businesses such as LTE toVerizon and Metro PCS and services to Sprint. The confidence TeliaSonera hasshown in us by selecting our LTE solutions in the beginning of this year furtherconfirms the technical quality of our solutions and strong services portfolio.For 2010 we are determined to increase our efforts to combine our strongtechnology leadership position and service capabilities to provide value to ourcustomers and ensure our continued healthy financial development," concludesHans Vestberg.FINANCIAL HIGHLIGHTSIncome 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 flow(2)) 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 thefourth quarter 2008(2))  Cash flow from operations excl. restructuring cash outlays that has beenprovided 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 bfor 2008 are excludedSales in the quarter were -16% lower year-over-year for comparable units, i.e.excluding Ericsson Mobile Platforms and the acquired Nortel CDMA and LTEbusiness in North America, and decreased -20% adjusted also for currencyexchange rate effects and hedging. The acquired Nortel business contributedsales of SEK 2.7 b. in the quarter. The fourth quarter 2008 was comparativelystrong 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 inNetworks were not fully offset by increased sales in Professional Services.The gross margin was down slightly sequentially due to product mix and effectsfrom the reduced scope in a managed services agreement in Italy and the Sprintcontract. Gross margin year-over-year was flat in the quarter as well as for thefull year, affected by a higher proportion of services as well as efficiencygains and restructuring effects.Operating expenses amounted to SEK 14.0 (15.3) b. in the quarter, excludingrestructuring charges. This includes operating expenses from the acquired Nortelbusiness. The year-over-year reduction is primarily a result of ongoing costreduction activities, offsetting negative impact from currency exchange rateeffects. Full year operating expenses amounted to SEK 52.9 (56.3) b., alsopositively 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, amountedto SEK 7.5 (9.0) b. in the quarter, including positive contribution from theacquired Nortel business. Operating margin was 13% (13%) in the quarter, despitelower year-over-year sales and was flat sequentially as a result of the ongoingcost reduction activities.For the full year, operating income, excluding joint ventures and restructuringcharges, 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. inthe quarter excluding restructuring charges, compared to SEK -1.5 b. in thethird quarter. This is a significant sequential improvement from ongoingefficiency programs and improved sales and margins in Sony Ericsson.Restructuring charges in joint ventures were SEK 1.0 b in the quarter. For thefull 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 interestrates and negative currency revaluation effects on financial assets andliabilities.The tax rate for 2009 was 34% (32%) mainly due to a lower tax percentage ratefrom the loss making joint venture companies. The tax rate excluding SonyEricsson and ST-Ericsson was 26%.Net income amounted to SEK 0.7 (4.1) b. in the quarter. For the full year, netincome 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 sequentiallyfrom 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 was117% (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 salesoutstanding (DSO) improved sequentially to 106 (118) days, mainly due to strongcollections.Inventory was reduced by SEK -4.1 b. in the quarter to SEK 22.7 (26.8) b. andturnover improved sequentially to 68 (77) days, mainly due to customary year-endproject completions.Balance sheet and other performance indicators Dec 31 Sep 30 June 30 Mar 31 Dec 31 SEK b. 2009 2009 2009 2009 2008 Net cash 36.1 33.9 27.9 22.9 34.7 Interest-bearing liabilities and post- employment benefits 40.7 45.9 47.6 41.2 40.4 Trade receivables 66.4 62.4 69.4 75.2 75.9    Days sales outstanding 106 118 121 124 106 Inventory 22.7 26.8 29.0 30.7 27.8    Of which market unit inventory 12.9 15.9 17.7 18.9 16.5    Inventory days 68 77 78 83 68 Payable days 57 57 59 65 55 Customer financing, net 2.3 2.7 3.1 2.8 2.8 Return on capital employed 4% 4% 5% 7% 11% Equity ratio 52% 52% 51% 52% 50%The net cash position increased by SEK 2.2 b. in the quarter to SEK 36.1 (33.9)b. Cash, cash equivalents and short-term investments amounted to SEK 76.7 (79.8)b. Gross cash decreased slightly in the quarter due to payments made for theacquisition of the Nortel business of SEK 8.3 b. and repayment of a callablebond of EUR 471 m. However, this was offset by a positive cash flow fromoperating activities of SEK 12.5 b.Customer financing remained low at SEK 2.3 (2.7) b.During the quarter, approximately SEK 2.6 b. of provisions were utilized, ofwhich SEK 1.1 b. related to restructuring. Additions of SEK 3.6 b. were made, ofwhich SEK 1.9 b. related to restructuring. Reversals of SEK 1.2 b. were made.Cost reductionsIn January, 2009, cost reduction activities were initiated, targeting annualsavings of SEK 10 b. from the second half of 2010 split equally between cost ofsales and operating expenses. Related restructuring charges were estimated toSEK 6-7 b.In the third quarter 2009, it was reported that the program was ahead of planand additional opportunities for efficiency improvements had evolved during theprogram and would lead to further cost savings, with related charges, during thelast three quarters of the program.The program is planned to be completed by the second quarter 2010 and it is nowestimated that the total annual savings of the entire program will amount to SEK15-16 b. from the second half of 2010. Related total restructuring charges areestimated to SEK 13-14 b.In the fourth quarter, restructuring charges, excluding joint ventures, amountedto SEK 4.3 b., resulting in a total of SEK 11.3 b. for the full year. At the endof the quarter, cash outlays of SEK 4.3 b. remain to be made.When the initial program was announced in January 2009, it was anticipated thatthe actions would result in a reduction of the number of employees by some5,000, of which about 1,000 in Sweden. The 5,000 has been exceeded and isestimated to reach approximately 6,500. 2009 2008 Restructuring charges, SEK b. Full year Q4 Q3 Q2 Q1 Full year Cost of sales -4.2 -1.7 -0.8 -1.3 -0.4 -2.5 Research and development expenses -6.1 -2.3 -1.8 -1.7 -0.3 -2.7 Selling and administrative expenses -1.0 -0.3 -0.1 -0.6 - -1.5 Total -11.3 -4.3 -2.7 -3.6 -0.7 -6.7SEGMENT RESULTS   Fourth quarter Third quarter Full year SEK b. 2009 2008 Change 2009 Change 2009 2008 Change Networks sales 38.5 45.8 -16% 30.3 27% 137.1 142.0 -3% Of which network rollout 6.7 7.6 -12% 5.8 15% 23.1 21.5 7% EBITDA margin 17% 17% - 15% - 15% 16% - Operating margin 13% 14% - 11% - 11% 11% - Professional Services 16.5 12.8 56.1 sales 16.2 2% 29% 49.0 15% Of which managed services 5.1 4.3 19% 3.6 43% 17.4 14.3 22% EBITDA margin 16% 19% - 17% - 17%(1)) 17% - Operating margin 13% 18% - 15% - 15%(1)) 16% - Multimedia sales(2)) 3.4 3.9 -14% 3.4 0% 13.3 12.7 5% EBITDA margin(2)) 20% 5% - 19% - 16% 8% - Operating margin(2)) 10% -2% - 11% - 8% 0% - Sales from divested 0.0 0.0 0.0 and transferred businesses 1.1 - - 5.2 - Total sales 58.3 67.0 -13% 46.4 26% 206.5 208.9 -1%All numbers exclude restructuring charges(1))  SEK 0.8 b. adjusted for divestment of TEMS in the second quarter 2009(2))  2008 and 2009 numbers for Multimedia exclude divested Ericsson MobilePlatforms and PBX operations and capital gain from divestment of Symbian sharesSEK 0.8 b. in fourth quarter 2008NetworksNetworks' sales in the quarter declined by -16% year-over-year. Full year salesdeclined by -3%. The mobile infrastructure market share was maintained well in2009. During the second half of 2009, Networks' sales were impacted by reducedoperator spending in a number of markets. Currency exchange rate effects had apositive impact on sales for the full year due to a strong USD in the beginningof 2009. Compared to the all-time-high GSM volumes in 2008, volumes decreasedand are not yet offset by increased sales of WCDMA and initial rollouts of LTE. The IP-router business developed well during the year and the common core partof the recent LTE win with TeliaSonera is based on Ericsson's SmartEdge IPplatform.Mobile voice and data traffic continues to grow and will in the longer-termrequire operator investments in capacity and next-generation IP networks.Current operator investment activity varies between regions and countries.During the year, operators in a number of developing markets, especially inCentral Europe, Middle East and Africa, have become increasingly cautious withinvestments. Meanwhile, operators in China, India and the US have continued toinvest.As of November 13, the former Nortel CDMA and LTE business are consolidated. Thevast majority of the sales are related to Networks and only a small proportionto Professional Services. In the quarter, the Nortel business added a total ofSEK 2.7 b. of sales with an operating margin well above Networks' average drivenby year-end seasonality.EBITDA-margin in the quarter was flat year-over-year at 17% (17%) despite lowersales, positively impacted by ongoing cost reduction activities. The full yearmargin was 15% (16%).Professional ServicesProfessional Services sales in the quarter were flat year-over-year. Organicgrowth in local currencies amounted to 2%. Managed services sales in the quarterincreased by 19% year-over-year and by 22% for the full year. Sales for thesecond half of the year were negatively impacted by the reduced scope in amanaged services agreement in Italy as well as somewhat lower volumes inproject-related services. At the same time, sales in the second half werepositively impacted by the contract with Sprint in the US.For the full year, sales increased 15% and growth in local currencies amountedto 8%.Despite 2009's financial climate, there has been a continued demand forservices, especially those targeting the operational efficiency of operators,such as managed services, consulting and systems integration.EBITDA-margin for Professional Services in the quarter declined to 16% (19%),negatively impacted by start-up costs from new managed services contracts withSprint and Zain as well as the reduced scope in a managed services agreement inItaly. This was partly offset by continued efficiency gains. The full yearadjusted EBITDA-margin was stable at 17% (17%).The total number of subscribers in managed networks is now 370 million, of which50% are in high-growth markets. After the close of the quarter, Ericssonannounced the acquisition of Pride Spa in Italy, a consulting and systemsintegration company. With the added 1,000 employees the number of servicesprofessionals now amounts to 40,000 globally.MultimediaMultimedia sales in the quarter for comparable units, i.e. adjusted for thedivestment of the PBX and mobile platform operations, decreased year-over-yearby -14% mainly due to tough comparison with a strong fourth quarter 2008 andsomewhat slower sales of revenue management solutions in several emergingmarkets. However, TV and multimedia brokering (IPX) continued to show gooddevelopment. The combined strength of the business support systems (BSS)offering and the strong services portfolio is generating increased operatorinterest.For the full year, sales increased by 5% for comparable units. Multimediabrokering (IPX) and revenue management solutions showed good development despitea decline in the fourth quarter.EBITDA-margin for comparable units, i.e. also adjusted for a capital gain fromdivestment of Symbian shares in the fourth quarter 2008, increased in thequarter to 20% (5%). For the full year, the margin amounted to 16% (8%),positively impacted by efficiency gains and an improved gross margin.Sony Ericsson     Fourth quarter    Third quarter Full year EUR m. 2009 2008 Change 2009 Change 2009 2008 Change Number of units shipped (m.) 14.6 24.2 -40% 14.1 3% 57.1 96.6 -41% Average selling price (EUR) 120 121 -1% 114 5% 119 116 3% Net sales 1,750 2,914 -40% 1,619 8% 6,788 11,244 -40% Gross margin 23% 15% - 16% - 15% 22% - Operating margin -10% -9% - -12% - -15% -1% - Income before taxes -190 -261 - -199 - -1,043 -83 - Income before taxes, excl restructuring charges -40 -133 - -198 - -878 92 - Net income -167 -187 - -164 - -836 -73 -Units shipped in the quarter were 14.6 million, a sequential increase of 3% anda decrease of -40% year-over-year. Sales in the quarter were EUR 1,750 million,a sequential increase of 8% and a decrease of -40% year-over-year. Thesequential increase was driven by seasonality and sales of Satio and Ainophones.Average selling price in the quarter increased sequentially by 5% due to productmix. Gross margin improved sequentially and year-over-year mainly driven bysales of new higher margin phones as well as positive impact of cost reductionactivities.Income before taxes for the quarter, excluding restructuring charges, was a lossof EUR -40 (-133) million. The reduced loss was due to improved gross margin andreduced operating expenses. As of December 31, 2009, Sony Ericsson had a netcash position of EUR 620 million.Ericsson's share in Sony Ericsson's income before tax was SEK -1.0 (-1.3) b. inthe quarter.Mid 2008 a program was initiated to reduce operating expenses by EUR 880million. Full benefit of the program is expected during second half 2010.Charges for the program are estimated to be well within the previously announcedEUR 500 million.ST-Ericsson 2009 2008 Proforma USD m. Full year Q4 Q3 Q2 Feb-Mar Q4 Net sales 2,524 740 728 666 391 746 Adjusted opera-ting income (1)) -369 -50 -77 -165 -78 -98 Operating income before taxes -581 -139 -121 -224 -98 -127 Net income -539 -125 -112 -213 -89 NA(1)       )Operating loss adjusted for amortization of acquisition relatedintangibles and restructuring chargesNet sales in the quarter showed an increase of 2% sequentially with furthermomentum in China.Adjusted operating loss in the quarter was USD -50 (-98) million. Inventorydeclined while net cash increased USD 13 million sequentially to USD 229million, including a one-time payment of USD 53 million from parent companies.This payment is related to final merger transaction adjustments already plannedsince the inception of the company.The USD 250 million cost synergies program defined by ST-NXP Wireless is nowfully completed. The USD 230 million savings plan, announced in April is ontrack and due to be completed by second quarter 2010. In December ST-Ericssonannounced another plan to further improve financial performance and increase itscompetitiveness. The plan is targeting additional annualized savings of USD 115million.ST-Ericsson is reported in US-GAAP. Ericsson's share in ST-Ericsson's incomebefore tax, adjusted to IFRS, was SEK -0.4 b. in the quarter, includingrestructur­ing charges of SEK 0.2 b. Ericsson Mobile Platforms incurred a lossof SEK 0.5 b. in January 2009, which is added to the reported year-to-dateresult in segment ST-Ericsson.REGIONAL OVERVIEW Fourth quarter Third quarter Full year Sales, SEK b. 2009 2008 Change 2009 Change 2009 2008 Change Western Europe 11.9 16.1 -26% 10.1 18% 44.6 51.6 -14% Central and Eastern Europe, 14.0 -21% 11.6 20% 50.7 -4% Middle East and Africa 17.6 53.1 Asia Pacific 16.7 20.5 -18% 15.3 9% 65.8 63.3 4% Latin America 5.9 7.9 -25% 5.0 18% 20.1 23.0 -13% North America 9.8 4.9 101% 4.4 126% 25.3 17.9 41% Total 58.3 67.0 -13% 46.4 26% 206.5 208.9 -1%Western Europe sales declined -21% year-over-year in the quarter and -6% for thefull-year for comparable units, i.e. excluding mobile platforms and PBX. Thesecond half of the year was impacted by the reduced scope of a managed servicesagreement in Italy. Demand for services continued to be good throughout theyear, especially in the UK. During the quarter, TV4 Group in Sweden selectedEricsson to operate its nationwide playout-services. In the quarter, Ericssonwas also awarded one of the largest contracts in the Nordics with Mobile Norwayfor a nationwide mobile broadband network and the world's first commercial4G/LTE network was launched in Stockholm by TeliaSonera. After the closing ofthe quarter, Ericsson was selected as the sole supplier of the common core and asupplier of access to TeliaSonera's 4G/LTE network in Norway and Sweden.Ericsson was also named supplier of the world's first 84 Mbps HSPA network to 3Scandinavia.Sales in Central and Eastern Europe, Middle East and Africa decreased in thequarter by -21% year-over-year and by -4% for the full year. This is the regionmost impacted by the economic climate in 2009, and the credit environment isstill tight for some operators. The decline in 2G is not yet offset by 3G/WCDMAsales. The interest for managed services remained strong in the region andEricsson was selected as supplier by Romania's largest wireline operatorRomtelecom with 400 employees and by operator du in UAE. A frame agreement for2010 for radio access and other products and services was signed with MTN.Asia Pacific sales in the quarter decreased -18% year-over-year and increased by4% for the full year. During the year, the region showed large variations whereChina, India, Japan and Vietnam developed well with major rollouts, whileBangladesh, Indonesia and Pakistan were affected by the economic climate. Indiasaw a slowdown in the fourth quarter due to the upcoming 3G licenses. In Taiwan,Ericsson will deliver HSPA and pre-paid charging to Far EasTone, covering thenorthern parts of the country. In Indonesia, Ericsson has been selected toexpand XL Axiata's GPRS/Data Charging Systems.Latin American sales in the quarter decreased by -25% year-over-year, and by-13% for the full year. Also this region has been affected by the economicclimate. In the second half of the year, sales were also negatively impacted bydelays of licensing of new spectrum and services. This has resulted in operatorsholding back investments in new technologies and applications, especially inlarger countries. Mobile subscriptions are however continuing to developpositively with net additions for voice and in particular for mobile broadbandservices.North American sales in the quarter increased by 101% year-over-year. Full-yearsales increased 41%. In the quarter, the acquired Nortel business added a totalof SEK 2.7 b. of sales. This was the first full quarter with the Sprint servicesbusiness. Professional services generated a significant proportion of therevenue in the fourth quarter. The US is now the largest market with 15% ofGroup sales in the quarter. Accelerating demand for mobile broadband and effectsof increased smartphone usage continue to drive data traffic and continuedcapacity investments in HSPA and LTE networks. The acquired Nortel assets andcustomer base substantially increase the addressable infrastructure and servicesmarket in North America.MARKET DEVELOPMENTGrowth rates are based on Ericsson and market estimatesTelecommunications plays a central role in the daily life of practically everyperson on earth. It is fundamental to the global economy and increasinglyimportant to the environment. Over the last decade, mobile became an ubiquitouscommunications service, enabling people from all regions and walks of life toconnect at an unprecedented level. The global economic slowdown is affecting allparts of the society. However, we believe that the fundamentals for longer-termpositive development for the industry remain solid. Ericsson is well positionedto drive and benefit from this development.Growth continues, with almost three billion new mobile subscriptions expectedthrough 2014. These will, however, mainly come from low-usage customers indeveloping areas or from volume type users with multiple subscriptions. Inparallel, mobile broadband is fast becoming the main growth driver for operatorsand equipment suppliers globally. Operators are increasingly focusing on networkspeed, with HSPA deployed in 130 countries today.There are signs of a shift in focus in the telecom industry from connectingplaces and people to connecting devices and applications.  In developedcountries, data growth and resulting data capacity expansions are beingstimulated by mobile broadband adoption and devices like smartphones,netbooks and laptops.  In developing countries we are still seeing continuedsubscriber growth.There is continued growth in mobile subscriptions, although the current growthrate is lower than in 2008. Mobile subscriptions grew by 163 million in thequarter to a total of 4.6 billion. In India alone, subscriptions grew by some 15million per month during the fourth quarter. The global number of new WCDMAsubscriptions is accelerating and grew by 38 million in the quarter to a totalof 452 million, of which 185 million are estimated to be HSPA. Inthe third quarter, fixed broadband connections grew to 438 million,adding 15 million subscribers.Voice traffic continues to be the main revenue source for operators even thoughdata represents an increasing share. For many large operators, mobile datarevenues constitute 25% of total service revenues or more. In addition tocapacity enhancements, operators face the challenge of converting to all-IPbroadband networks. This will include increased deployments of broadband access,routing and transmission equipment along with next-generation service deliveryand revenue management systems.There is continued good growth in professional services, fueled by operators'desire to reduce operating expenses and improve efficiency in network operationand maintenance. The move toward all-IP and increased network complexity willcreate further demand for systems integration and consulting.PARENT COMPANY INFORMATIONNet sales for the year amounted to SEK 0.3 (5.1) billion and income afterfinancial items was SEK 8.1 (19.4) billion. Effective January 1, 2009, the rightto all license revenues from third parties related to patent licenses wastransferred to Ericsson AB, a wholly owned subsidiary, and consequently netsales in 2009 were insignificant compared to 2008.Major changes in the Parent Company's financial position for the year includeinvestments in the joint venture ST-Ericsson of SEK 8.6 billion, decreasedcurrent and non-current receivables from subsidiaries of SEK 10.1 billion,decreased other current receivables of SEK 2.0 billion, increased cash, cashequivalents and short-term investments of SEK 3.2 billion, increased current andnon-current liabilities to subsidiaries of SEK 5.0 billion and decreased othercurrent liabilities of SEK 7.4 billion. At year end, cash, cash equivalents and short-term investments amounted to SEK62.4 (59.2) billion.As per December 31, 2009, guarantees to Sony Ericsson amount to SEK 0.8 b. andare reported as Contingent Liabilities.In accordance with the conditions of the long-term variable remuneration program(LTV) for Ericsson employees, 3,237,304 shares from treasury stock were sold ordistributed to employees during the fourth quarter and 9,087,564 shares duringthe year. In the second quarter 27,000,000 treasury shares were repurchased. Theholding of treasury stock at December 31, 2009, was 78,978,533 Class B shares.DIVIDEND PROPOSALThe Board of Directors will propose to the Annual General Meeting a dividend ofSEK 2.00 (1.85) per share, representing some SEK 6.4 (6.0) b., and April16, 2010, as record day for payment of dividend.ANNUAL REPORTThe annual report will be made available to shareholders on our websitewww.ericsson.com and at the Ericsson headquarters,Torshamnsgatan 23, Stockholm, approximately two weeks prior to the AnnualGeneral Meeting.ANNUAL GENERAL MEETING OF SHAREHOLDERSThe Annual General Meeting of shareholders will be held on April 13, 15.00 (CET)at Kistam?an, Stockholm.OTHER INFORMATIONEricsson to acquire majority of Nortel's GSM businessOn November 25, 2009, Ericsson was selected to acquire certain assets of theCarrier Networks division relating to Nortel's GSM business in the US andCanada. The purchase is an asset transaction at the cash purchase price of USD70 million on a cash and debt free basis. Ericsson's bid was made together withKapsch CarrierCom AG of Austria that will acquire the remaining assets outsideNorth America at a price of USD 33 million.The operations generated approximately USD 400 million of sales in 2008 and haveapproximately 350 employees.Consummation of the transaction is subject to approval of US and Canadianbankruptcy courts and the satisfaction of regulatory and other conditions.Ericsson to acquire Pride SpaOn January 12, 2010, Ericsson announced that it has agreed to acquire Pride Spain Italy, a consulting and systems integration company. With the added 1,000employees the number of services professionals now amounts to 40,000 globally.Closing is expected by February 1, 2010.AppointmentsJan Frykhammar has been appointed CFO and Executive Vice President.Magnus Mandersson has been appointed head of business unit Global Services andis also a member of the Group Management Team.Rima Qureshi has been appointed head of business unit CDMA Mobile Systems andmember of the Group Management Team. She is also head of Ericsson Response.Gary Pinkham, presently head of Global Investor and Analyst Relations, has beenappointed head of Corporate Affairs and Communications in North America.Cesare Avenia, presently head of market unit South East Europe, has beenappointed Chief Brand Officer and member of the Group Management Team.H?n Eriksson, CTO and member of the Group Management Team, has, in addition tohis present responsibilities, been appointed head of Ericsson in Silicon Valley.Johan Wibergh, head of business unit Networks and member of the Group ManagementTeam, has been appointed Executive Vice President.Assessment of risk environmentEricsson's operational and financial risk factors and uncertainties aredescribed under "Risk factors Assess­ment of risk environment" in our AnnualReport 2008.Risk factors and uncertainties in focus during the forthcoming six-month periodfor the Parent Company and the Ericsson Group include:·   potential negative effects of the continued uncertainty in the financialmarkets and the weak economic business environment on operators' willingness toinvest in network development as well as uncertainty regarding the financialstability of suppliers, for example due to lack of borrowing facilities, orreduced consumer telecom spending, or increased pressure on us to providefinancing;·   effects on gross margins and/or working capital of the product mix in theNetworks segment between sales of software, upgrades and extensions and thepro-portion of new network build-outs and break-in contracts;·   a volatile sales pattern in the Multimedia segment or variability in ouroverall sales seasonality could make it more difficult to forecast future sales;·   results and capital needs of our two major joint ven­tures, Sony Ericssonand ST-Ericsson, which both are negatively affected to a larger extent than ourthree other segments by the current economic slowdown;·   effects of the ongoing industry consolidation among our customers as well asbetween our largest competitors, e.g. intensified price competition;·   changes in foreign exchange rates, in particular USD and EUR;·   continued political unrest or instability in certain markets.Ericsson conducts business in certain countries which are subject to traderestrictions or which are focused on by certain investors. We stringently followall relevant regulations and trade embargos applicable to us in our dealingswith customers operating in such countries. Moreover, Ericsson operates globallyin accordance with Group level policies and directives for business ethics andconduct. In no way should our business activities in these countries beconstrued as supporting a particular political agenda or regime. We haveactivities in such countries mainly due to that certain customers withmulti-country operations put demands on us to support them in all of theirmarkets.Please refer further to Ericsson's Annual Report 2008, where we describe ourrisks and uncertainties along with our strategies and tactics to mitigate therisk exposures or limit unfavorable outcomes.Stockholm, January 25, 2010Hans Vestberg, President and CEOTelefonaktiebolaget LM Ericsson (publ)Date for next report: April 23, 2010AUDITORS' REVIEW REPORTWe have reviewed this report for the period January 1 to December 31, 2009, forTelefonaktiebolaget LM Ericsson (publ). The board of directors and the CEO areresponsible for the preparation and presentation of this interim report inaccordance with IAS 34 and the Annual Accounts Act. Our responsibility is toexpress a conclusion on this interim report based on our review.We conducted our review in accordance with the Standard on Review EngagementsS? 2410, Review of Interim Financial Information Performed by the IndependentAuditor of the Entity, issued by FAR SRS. A review consists of making inquiries,primarily of persons responsible for financial and accounting matters, andapplying analytical and other review procedures. A review is substantially lessin scope than an audit conducted in accordance with Standards on Auditing inSweden, RS, and other generally accepted auditing practices. The proceduresperformed in a review do not enable us to obtain a level of assurance that wouldmake 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 samelevel of assurance as a conclusion expressed based on an audit.Based on our review, nothing has come to our attention that causes us to believethat the interim report is not prepared, in all material respects, in accordancewith IAS 34 and the Swedish Annual Accounts Act regarding the Group and with theSwedish Annual Accounts Act regarding the Parent Company.Stockholm, January 25, 2010PricewaterhouseCoopers ABPeter ClemedtsonAuthorized Public AccountantEDITOR'S NOTETo read the complete report with tables, please go to:www.ericsson.com/investors/financial_reports/2009/12month09-en.pdfEricsson invites media, investors and analysts to a press conference at theEricsson headquarters, Torshamnsgatan 23, Stockholm, at 09.00 (CET), January25.An analysts, investors and media conference call will begin at 14.00 (CET).Live webcasts of the press conference and conference call as well as supportingslides will be available at www.ericsson.com/press andwww.ericsson.com/investors.FOR FURTHER INFORMATION, PLEASE CONTACTHenry St?on, Senior Vice President, CommunicationsPhone: +46 10 719 4044E-mail: investor.relations(at)ericsson.com or press.relations(at)ericsson.com InvestorsGary Pinkham, Vice President,Investor RelationsPhone: +46 10 719 0000E-mail: investor.relations(at)ericsson.com Susanne Andersson,Investor RelationsPhone: +46 10 719 4631E-mail: investor.relations(at)ericsson.com Lars Jacobsson,Investor RelationsPhone: +46 10 719 9489E-mail: investor.relations(at)ericsson.com Media?e Lindskog, Vice President,Head of Public and Media RelationsPhone: +46 10 719 9725, +46 730 244 872E-mail: media.relations(at)ericsson.com Ola Rembe,Public and Media RelationsPhone: +46 10 719 9727, +46 730 244 873E-mail: media.relations(at)ericsson.com Telefonaktiebolaget LM Ericsson (publ)Org. number: 556016-0680Torshamnsgatan 23SE-164 83 StockholmPhone: +46 10 719 0000www.ericsson.com Disclosure Pursuant to the Swedish Securities Markets ActEricsson discloses the information provided herein pursuant to the SecuritiesMarkets Act. The information was submitted for publication at 07.30 CET, onJanuary 25, 2010.Safe Harbor Statement of Ericsson under the US Private Securities LitigationReform Act of 1995;All statements made or incorporated by reference in this release, other thanstatements or characterizations of historical facts, are forward-lookingstatements. These forward-looking statements are based on our currentexpectations, estimates and projections about our industry, management's beliefsand certain assumptions made by us. Forward-looking statements can often beidentified 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, andinclude, among others, statements regarding: (i) strategies, outlook and growthprospects; (ii) positioning to deliver future plans and to realize potential forfuture growth; (iii) liquidity and capital resources and expenditure, and ourcredit ratings; (iv) growth in demand for our products and services; (v) ourjoint 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) compliancewith rules and regulations and (xvi) infringements of intellectual propertyrights of others.In addition, any statements that refer to expectations, projections or othercharacterizations of future events or circumstances, including any underlyingassumptions, are forward-looking statements. These forward-looking statementsspeak only as of the date hereof and are based upon the information available tous at this time. Such information is subject to change, and we will notnecessarily inform you of such changes. These statements are not guarantees offuture performance and are subject to risks, uncertainties and assumptions thatare difficult to predict. Therefore, our actual results could differ materiallyand adversely from those expressed in any forward-looking statements as a resultof various factors. Important factors that may cause such a difference forEricsson include, but are not limited to: (i) material adverse changes in themarkets in which we operate or in global economic conditions; (ii) increasedproduct and price competition; (iii) reductions in capital expenditure bynetwork operators; (iv) the cost of technological innovation and increasedexpenditure to improve quality of service; (v) significant changes in marketshare for our principal products and services; (vi) foreign exchange rate orinterest rate fluctuations; and (vii) the successful implementation of ourbusiness and operational initiatives.[HUG#1376554] FOURTH QUARTER REPORT 2009: http://hugin.info/1061/R/1376554/337937.pdf

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