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

January 16, 2009

 

 

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

Announcement of LM Ericsson Telephone Company, dated January 16, 2009, regarding “Sony Ericsson’s fourth quarter and full year 2008 report”.

 

 

 

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PRESS RELEASE		January 16, 2009

Sony Ericsson reports results for fourth quarter and full year 2008

Highlights:

 

•

Global economic slowdown leads to contracting consumer demand

 

•

Previously announced annual Euro 300 million cost savings on track

 

•

Initiated additional Euro 180 million annual cost savings

 

•

Joined the Open Handset Alliance and developing new phone using Android Open Source software

 

•

Successful rollout of Xperia™ X1, Cyber-shot™C905 phones and PlayNow™ plus music service

London, UK – The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the fourth quarter and full year ended December 31, 2008 is as follows:

 

		Q4 2008			Q3 2008			Q4 2007			FY 2008			FY 2007
Number of units shipped (million)		24.2			25.7			30.8			96.6			103.4
Sales (Euro m.)		2,914			2,808			3,771			11,244			12,916
Gross margin (%)		15	%		22	%		32	%		22	%		31	%
Operating income (Euro m.)		-262			-33			489			-113			1,544
Operating margin (%)		-9	%		-1	%		13	%		-1	%		12	%
Restructuring charges (Euro m.)		129			35			—			175			—
Operating income excl. restructuring charges (Euro m.)		-133			2			489			61			1,544
Operating margin excl. restructuring charges (%)		-5	%		0	%		13	%		1	%		12	%
Income before taxes (IBT) (Euro m.)		-261			-23			501			-83			1,574
IBT excl. restructuring charges (Euro m.)		-133			12			501			92			1,574
Net income (Euro m.)		-187			-25			373			-73			1,114
Average selling price (Euro)		121			109			123			116			125

Units shipped in the quarter were 24.2 million, a sequential decrease of 6% and a year-on-year decrease of 21%.

Sales for the quarter were Euro 2,914 million, an increase of 4% sequentially due to a positive impact of currency fluctuations, and a decrease of 23% compared to Q4 2007. The decline in sales year-on-year was driven by lower volumes, due to the global economic slowdown that resulted in contracting consumer demand and decreased availability of credit.

Gross margin became 15% due to negative impact from exchange rate fluctuations, restructuring charges and material write-offs.

Foreign exchange fluctuations had a positive impact on sales in total, but a large negative impact on costs of goods sold (ie. costs increased) sequentially, as well as year-on-year.

Income before taxes for the quarter was Euro -133 million, excluding restructuring charges of Euro 129 million, compared to the profit of Euro 501 million in Q4 2007. Despite a negative result in the quarter, Sony Ericsson maintained a healthy balance sheet with a strong, net cash position of Euro 1,072 million.

The average selling price (ASP) for Sony Ericsson in Q4 2008 was Euro 121, an increase sequentially but a decrease year-on-year. The sequential increase of ASP was due to a positive impact of foreign exchange rate fluctuations and to the sale of a higher proportion of high-end models. Estimated market share for Q4 2008 is maintained at around 8%.

“In economic terms, 2008 has been a tumultuous year with world markets experiencing a serious downturn. The mobile phone market has been greatly affected by this and as expected, the fourth quarter continued to be very challenging for Sony Ericsson. Our business alignment is progressing as planned, with the full effect of annual savings of around Euro 300 million expected by the second half of 2009. We foresee a continued deterioration in the market place in 2009, particularly in the first half,” said Dick Komiyama, President, Sony Ericsson.

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The additional cost saving measures initiated by Sony Ericsson are aimed at reducing operating expenses by a further Euro 180 million annually, with the full effect expected at the end of 2009. Sony Ericsson currently estimates that the cost for the additional restructuring activities will be covered by the previously announced Euro 300 million restructuring charges.

In Q4 2008, the successful roll out of the Xperia™ X1 and Cyber-shot™C905; Sony Ericsson’s first eight mega pixel phone as well as the PlayNow™ plus music service positively impacted the business. In the same quarter, Sony Ericsson announced that it joined the Open Handset Alliance and is currently developing a new phone that uses the Android Open Source software.

Earlier in 2008, Sony Ericsson announced that it became a founding member of the Symbian Foundation; an initiative will create an open mobile software platform based on Symbian OS.

Sony Ericsson estimates the 2008 global handset market as being around 1,190 million units or around 6% growth from 2007, compared to the company’s previous forecast of around 10%. Sony Ericsson forecasts that the global handset market will contract in 2009 and that the industry ASP will continue to decline.

Cyber-shot™ is a trademark of the Sony Corporation.

The Liquid Identity logo, Xperia™ and the Xperia™ logo and PlayNow™plus are trademarks or registered trademarks of Sony Ericsson Mobile

Communications AB.

Sony is a trademark or registered trademark of Sony Corporation. Ericsson is the trademark or registered trademark of Telefonaktiebolaget LM Ericsson.

Other product and company names mentioned herein may be the trademarks of their respective owners. Any rights not expressly granted herein are reserved. Subject to change without prior notice.

EDITOR’S NOTES:

Financial statements:

Consolidated income statement

Consolidated income statement full year

Consolidated income statement isolated quarters

Consolidated balance sheet

Consolidated statement of cash flows

Consolidated statement of cash flows full year

Consolidated statement of cash flows isolated quarters

Additional information:

Net sales by market area, by quarter

- ENDS -

Sony Ericsson is a top, global industry player with sales of around 97 million phones in 2008. Diversity is one of the core strengths of the company, with operations in over 80 countries including manufacturing in China and R&D sites in China, Europe, India, Japan and North America. Sony Ericsson was established as a 50:50 joint venture by Sony and Ericsson in October 2001, with global corporate functions located in London. For more information about Sony Ericsson please visit www.sonyericsson.com

CONTACTS:

 

Investors / Analysts
Ericsson Investor Relations Gary Pinkham (Stockholm) +46 10 719 0858 Susanne Andersson (Stockholm) + 46 10 719 4631		Sony Investor Relations Shinji Tomita (London) +44 20 7426 8696 Gen Tsuchikawa (Tokyo) +81 3 6748 2180

Press / Media

Sony Ericsson Global Communications and PR

Aldo Liguori (London) +44 20 8762 5860

Merran Wrigley (London) +44 20 8762 5862

Simone Bresi-Ando (London) +44 20 8762 5863

This press release contains forward-looking statements that involve inherent risks and uncertainties. We have identified certain important factors that may cause actual results to differ materially from those contained in such forward-looking statements. For a detailed description of risk factors, see Sony’s and Ericsson’s filings with the US Securities and Exchange Commission, particularly each company’s latest published Annual Report on Form 20-F.

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Sony Ericsson

CONSOLIDATED INCOME STATEMENT

 

		Oct-Dec
EUR million		2008			2007			Change
Net sales		2,914			3,771			-23	%
Cost of sales		-2,476			-2,573			-4	%
Gross profit		438			1,198			-63	%
Gross margin %		15.0	%		31.8	%		-17	%
Research and development expenses		-359			-349			3	%
Selling and administrative expenses		-366			-375			-2	%
Operating expenses		-725			-724			0	%
Other operating income, net		24			15			62	%
Operating income		-262			489			-154	%
Operating margin %		-9.0	%		13.0	%		-22	%
Financial income		28			19			47	%
Financial expenses		-27			-7			287	%
Income after financial items		-261			501			-152	%
Taxes		81			-118			-169	%
Minority interest		-7			-10			-28	%
Net income		-187			373			-150	%
Number of units shipped (million)		24.2			30.8			-21	%
ASP (EUR)		121			123			-2	%

 

EUR Million		Oct-Dec 2008
Restructuring charges
Cost of sales		67
Research and development expenses		35
Sales and administrative expenses		24
Other operating income, net		3
Total		129

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Sony Ericsson

CONSOLIDATED INCOME STATEMENT

 

		Jan-Dec
EUR million		2008			2007			Change
Net sales		11,244			12,916			-13	%
Cost of sales		-8,750			-8,958			-2	%
Gross profit		2,494			3,958			-37	%
Gross margin %		22.2	%		30.6	%		-8	%
Research and development expenses		-1,379			-1,173			18	%
Selling and administrative expenses		-1,249			-1,260			-1	%
Operating expenses		-2,628			-2,432			8	%
Other operating income, net		21			18			19	%
Operating income		-113			1,544			-107	%
Operating margin %		-1.0	%		11.9	%		-13	%
Financial income		101			62			64	%
Financial expenses		-71			-32			122	%
Income after financial items		-83			1,574			-105	%
Taxes		31			-423			-107	%
Minority interest		-21			-36			-42	%
Net income		-73			1,114			-107	%
Number of units shipped (million)		96.6			103.4			-7	%
ASP (EUR)		116			125			-7	%

 

EUR Million		Jan-Dec 2008
Restructuring charges
Cost of sales		75
Research and development expenses		62
Sales and administrative expenses		29
Other operating income, net		9
Total		175

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Sony Ericsson

CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS

 

		2008												2007
EUR million		Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Net sales		2,914			2,808			2,820			2,702			3,771			3,108			3,112			2,925
Cost of sales		-2,476			-2,192			-2,168			-1,914			-2,573			-2,154			-2,192			-2,039
Gross profit		438			616			653			788			1,198			954			921			886
Gross margin %		15.0	%		21.9	%		23.1	%		29.2	%		31.8	%		30.7	%		29.6	%		30.3	%
Research and development expenses		-359			-337			-344			-339			-349			-280			-283			-261
Selling and administrative expenses		-366			-303			-310			-270			-375			-280			-321			-284
Operating expenses		-725			-640			-653			-610			-724			-560			-604			-545
Other operating income, net		24			-8			-2			6			15			-1			-2			5
Operating income		-262			-33			-2			184			489			393			315			346
Operating margin %		-9.0	%		-1.2	%		-0.1	%		6.8	%		13.0	%		12.7	%		10.1	%		11.8	%
Financial income		28			25			25			24			19			7			18			18
Financial expenses		-27			-15			-14			-15			-7			-16			-6			-2
Income after financial items		-261			-23			8			193			501			384			327			362
Taxes		81			6			0			-57			-118			-109			-97			-100
Minority interest		-7			-8			-3			-3			-10			-8			-10			-9
Net income		-187			-25			6			133			373			267			220			254
Number of units shipped (million)		24.2			25.7			24.4			22.3			30.8			25.9			24.9			21.8
ASP (EUR)		121			109			116			121			123			120			125			134

 

EUR Million		2008 *
Restructuring charges		Q4		Q3		Q2
Cost of sales		67		0		8
Research and development expenses		35		26		2
Sales and administrative expenses		24		3		1
Other operating income, net		3		6		0
Total		129		35		11

 

*	Restructuring charges were not incurred in the first quarter of 2008.

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Sony Ericsson

CONSOLIDATED BALANCE SHEET

 

EUR million		Dec 31 2008		Sep 30 2008		Jun 30 2008		Dec 31 2007
ASSETS
Total fixed and financial assets		590		649		590		572
Current assets
Inventories		531		717		538		437
Accounts receivables		1,629		1,815		1,905		1,870
Other assets		585		527		511		345
Other short-term cash investments		707		918		966		1,431
Cash and bank		418		555		624		724
Total current assets		3,870		4,532		4,544		4,808
Total assets		4,460		5,180		5,134		5,380
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity		1,217		1,429		1,684		2,026
Minority interest		57		50		35		64
Total equity		1,274		1,480		1,719		2,090
Total long-term liabilities		30		39		25		26
Accounts payable		990		1,453		1,436		1,263
Other current liabilities		2,166		2,208		1,954		2,001
Total current liabilities		3,156		3,661		3,390		3,264
Total shareholders’ equity and liabilities		4,460		5,180		5,134		5,380
Net cash*		1,072		1,374		1,591		2,155

 

*	Net cash is defined as cash and bank plus short-term cash investments less interest bearing liabilities.

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS

 

		Oct-Dec
EUR million		2008		2007
OPERATIONS
Net income		-187		373
Adjustments to reconcile net income to cash		37		17
		-150		390
Changes in operating net assets		-168		44
Cash flow from operating activities		-318		434
INVESTMENTS
Investing activities		41		-27
Cash flow from investing activities		41		-27
FINANCING
Financing activities		-46		0
Cash flow from financing activities		-46		0
Net change in cash		-323		408
Cash, beginning of period		1,473		1,758
Translation difference in Cash		-25		-10
Cash, end of period		1,125		2,155

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS

 

		Jan-Dec
EUR million		2008		2007
OPERATIONS
Net income		-73		1,114
Adjustments to reconcile net income to cash		146		107
		73		1,221
Changes in operating net assets		-323		-305
Cash flow from operating activities		-250		916
INVESTMENTS
Investing activities		-64		-164
Cash flow from investing activities		-64		-164
FINANCING
Financing activities		-754		-849
Cash flow from financing activities		-754		-849
Net change in cash		-1,068		-97
Cash, beginning of period		2,155		2,273
Translation difference in Cash		37		-21
Cash, end of period		1,125		2,155

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

 

		2008								2007
EUR million		Oct-Dec		Jul-Sep		Apr-Jun		Jan-Mar		Oct-Dec		Jul-Sep		Apr-Jun		Jan-Mar
OPERATIONS
Net income		-187		-25		6		133		373		267		220		254
Adjustments to reconcile net income to cash		37		39		40		31		17		32		30		28
		-150		15		46		164		390		299		250		282
Changes in operating net assets		-168		88		-142		-101		44		88		16		-454
Cash flow from operating activities		-318		102		-96		64		434		387		266		-172
INVESTMENTS
Investing activities		41		-55		-29		-22		-27		-53		-31		-53
Cash flow from investing activities		41		-55		-29		-22		-27		-53		-31		-53
FINANCING
Financing activities		-46		-238		-8		-462		0		-300		-548		-1
Cash flow from financing activities		-46		-238		-8		-462		0		-300		-548		-1
Net change in cash		-323		-191		-133		-421		408		34		-312		-226
Cash, beginning of period		1,473		1,591		1,711		2,155		1,758		1,730		2,045		2,273
Translation difference in Cash		-25		74		13		-24		-10		-6		-3		-2
Cash, end of period		1,125		1,473		1,591		1,711		2,155		1,758		1,730		2,045

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Sony Ericsson

NET SALES BY MARKET AREA BY QUARTER

EUR million

 

		2008												2007
Isolated quarters		Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Europe, Middle East & Africa *		1,642			1,427			1,386			1,494			2,251			1,715			1,729			1,598
Americas		636			703			740			486			636			573			499			365
Asia		636			678			694			722			884			820			885			961
Total		2,914			2,808			2,820			2,702			3,771			3,108			3,112			2,925
* of which Western Europe		1,117			947			900			979			1,569			1,103			1,102			1,078
		2008												2007
Sequential change (%)		Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Europe, Middle East & Africa *		15	%		3	%		-7	%		-34	%		31	%		-1	%		8	%		-26	%
Americas		-10	%		-5	%		52	%		-24	%		11	%		15	%		37	%		-34	%
Asia		-6	%		-2	%		-4	%		-18	%		8	%		-7	%		-8	%		-11	%
Total		4	%		0	%		4	%		-28	%		21	%		0	%		6	%		-23	%
* of which Western Europe		18	%		5	%		-8	%		-38	%		42	%		0	%		2	%		-27	%
		2008												2007
Year over year change (%)		Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Europe, Middle East & Africa *		-27	%		-17	%		-20	%		-7	%		5	%		7	%		59	%		55	%
Americas		0	%		23	%		48	%		33	%		15	%		37	%		52	%		46	%
Asia		-28	%		-17	%		-21	%		-25	%		-18	%		-8	%		4	%		35	%
Total		-23	%		-10	%		-9	%		-8	%		0	%		7	%		37	%		47	%
* of which Western Europe		-29	%		-14	%		-18	%		-9	%		6	%		-1	%		47	%		60	%
		2008												2007
Year to date		0812			0809			0806			0803			0712			0709			0706			0703
Europe, Middle East & Africa *		5,966			4,324			2,879			1,494			7,293			5,042			3,328			1,598
Americas		2,566			1,930			1,226			486			2,072			1,436			864			365
Asia		2,712			2,076			1,416			722			3,550			2,666			1,846			961
Total		11,244			8,330			5,522			2,702			12,916			9,145			6,037			2,925
* of which Western Europe		3,943			2,826			1,879			979			4,852			3,283			2,179			1,078
		2008												2007
YTD year over year change (%)		0812			0809			0806			0803			0712			0709			0706			0703
Europe, Middle East & Africa *		-18	%		-14	%		-13	%		-7	%		24	%		36	%		57	%		55	%
Americas		24	%		34	%		42	%		33	%		34	%		44	%		49	%		46	%
Asia		-24	%		-22	%		-23	%		-25	%		0	%		8	%		18	%		35	%
Total		-13	%		-9	%		-9	%		-8	%		18	%		27	%		42	%		47	%
* of which Western Europe		-19	%		-14	%		-14	%		-9	%		21	%		29	%		53	%		60	%

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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: January 16, 2009