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

October 17, 2008

 

 

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 October 17, 2008 regarding “Sony Ericsson reports third quarter results “

 

 

 

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PRESS RELEASE		October 17, 2008

Sony Ericsson reports third quarter results

Q3 highlights:

 

•

Break even results, excluding restructuring charges, as challenging business conditions continued

 

•

C902 Cyber-shot™ camera phone is hit model of the quarter

 

•

First Xperia™ branded multimedia phone X1 began shipping

 

•

Expansion of music service offering with announcement of PlayNow™ plus

London, UK - The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the third quarter ended September 30, 2008 is as follows:

 

		Q3 2008			Q2 2008			Q3 2007
Number of units shipped (million)		25.7			24.4			25.9
Sales (Euro m.)		2,808			2,820			3,108
Gross margin (%)		22	%		23	%		31	%
Operating income (Euro m.)		-33			-2			393
Operating margin (%)		-1	%		-0	%		13	%
Restructuring charges (Euro m.)		35			11			0
Operating income excl. restructuring charges (Euro m.)		2			8			393
Operating margin excl. restructuring charges (%)		0	%		0	%		13	%
Income before taxes (IBT) (Euro m.)		-23			8			384
IBT excl. restructuring charges (Euro m.)		12			19			384
Net income (Euro m.)		-25			6			267
Average selling price (Euro)		109			116			120

Units shipped in the quarter were 25.7 million, a sequential increase but flat year-on-year, while sales for the quarter were Euro 2,808 million, a decrease of 10% compared to the third quarter of 2007. Most of this decrease reflects the impact of exchange rate fluctuations, as well as a shift of the product mix to more lower priced phones. Gross margin also decreased year-on-year and sequentially due to continued price pressure at a time of adverse cost trends in the supplier base. This was partially mitigated by the introduction of new products at the end of the second quarter, such as the C902 Cyber-shot™ camera phone, which is selling well; however, strong competition continues, particularly in Europe. Income before taxes for the quarter was Euro 12 million, excluding restructuring charges of Euro 35 million, a decrease compared to the third quarter of 2007.

Average selling price (ASP) for Sony Ericsson decreased both sequentially and year-on-year in line with levels seen in previous quarters. This is due to selling more lower priced phones and increased price competition in the market for mid- to high-end phones. Sequentially, market share for the third quarter remained flat and is estimated to be around 8%.

“As expected the third quarter has continued to be challenging for Sony Ericsson. We have moved forward with our plans to align operations and resources with the consolidation of R&D facilities into a more agile and cost efficient organisational structure. As previously announced, our target remains to reduce operating expenses by Euro 300 million annually by the end of the second quarter 2009, with the full effects expected to appear in the second half of 2009. These plans are progressing in line with

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expectations,” said Dick Komiyama, President, Sony Ericsson. “We are committed to executing our alignment plan as speedily as possible to ensure we have the right size and organisational structure to return the business to healthy profitability.”

During the third quarter Sony Ericsson announced PlayNow™ plus, the next step in its music service offering. PlayNow™ plus is a high speed and high quality music download service for both the phone and PC that will launch in the fourth quarter with Telenor in Sweden with a special edition Sony Ericsson W902 Walkman® phone integrated with the PlayNow™ plus service. Further roll-outs of the service are planned with other network partners around the world in early 2009.

Sony Ericsson also announced a number of new phones in the quarter, including three new Walkman® phones, its first UMA handset (G705u) and the first models with integrated You Tube™ connectivity (W595, W902, G705). In addition, Sony Ericsson started a major marketing initiative to launch its first multimedia convergence phone under the new sub-brand; Xperia™, and started shipping the phone, the Xperia™ X1, at the end of the quarter.

As communicated previously, Sony Ericsson paid a second dividend to the parent companies totalling Euro 300 million (Euro 150 million each) in the quarter based on 2007 earnings, and at the end of September 2008 Sony Ericsson had net cash of Euro 1.4 billion.

Sony Ericsson forecasts that the global handset market for 2008 will grow at a rate of around 10% from more than 1.1 billion units in 2007, while the industry ASP will continue to decline. The majority of this growth is expected to be in emerging markets where lower priced phones dominate.

Cyber-shot™ and WALKMAN® are trademarks of Sony Corporation.

The Liquid Identity logo, Xperia™ and the Xperia™ logo and PlayNow™ 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 and additional information:

Financial statements:

Consolidated income statement (2)

Consolidated income statement – isolated quarters

Consolidated balance sheet

Consolidated statement of cash flows (2)

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 over 100 million phones in 2007. 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

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CONTACTS:

 

Investors / Analysts
Ericsson Investor Relations		Sony Investor Relations
Gary Pinkham (Stockholm) +46 8 719 0858		Shinji Tomita (London) +44 20 7426 8696
Susanne Andersson (Stockholm) + 46 8 719 4631		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

 

		Jul-Sep
EUR million		2008			2007			Change
Net sales		2,808			3,108			-10	%
Cost of sales		-2,192			-2,154			2	%
Gross profit		616			954			-35	%
Gross margin %		21.9	%		30.7	%		-9	%
Research and development expenses		-337			-280			20	%
Selling and administrative expenses		-303			-280			8	%
Operating expenses		-640			-560			14	%
Other operating income, net		-8			-1			-586	%
Operating income		-33			393			-108	%
Operating margin %		-1.2	%		12.7	%		-14	%
Financial income		25			7			274	%
Financial expenses		-15			-16			-11	%
Income after financial items		-23			384			-106	%
Taxes		6			-109			-106	%
Minority interest		-8			-8			1	%
Net income		-25			267			-109	%
Number of units shipped (million)		25.7			25.9			-1	%
ASP (EUR)		109			120			-9	%

 

EUR million		Jul-Sep
Restructuring charges		2008
Cost of sales		0
Research and development expenses		26
Sales and administrative expenses		3
Other operating income, net		6
Total		35

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Sony Ericsson

CONSOLIDATED INCOME STATEMENT

 

		Jan-Sep
EUR million		2008			2007			Change
Net sales		8,330			9,145			-9	%
Cost of sales		-6,274			-6,384			-2	%
Gross profit		2,056			2,760			-26	%
Gross margin %		24.7	%		30.2	%		-6	%
Research and development expenses		-1,020			-824			24	%
Selling and administrative expenses		-883			-885			0	%
Operating expenses		-1,903			-1,709			11	%
Other operating income, net		-3			2			-239	%
Operating income		149			1,055			-86	%
Operating margin %		1.8	%		11.5	%		-10	%
Financial income		73			43			72	%
Financial expenses		-44			-25			76	%
Income after financial items		179			1,073			-83	%
Taxes		-50			-306			-84	%
Minority interest		-14			-27			-47	%
Net income		114			741			-85	%
Number of units shipped (million)		72.5			72.6			0	%
ASP (EUR)		115			126			-9	%

 

EUR million		Jan-Sep 2008
Restructuring charges
Cost of sales		8
Research and development expenses		28
Sales and administrative expenses		4
Other operating income, net		6
Total		46

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Sony Ericsson

CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS

 

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

 

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

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Sony Ericsson

CONSOLIDATED BALANCE SHEET

 

EUR million		Sep 30 2008		Jun 30 2008		Dec 31 2007		Sep 30 2007
ASSETS
Total fixed and financial assets		649		590		572		511
Current assets
Inventories		717		538		437		620
Accounts receivables		1,815		1,905		1,870		1,803
Other assets		527		511		345		544
Other short-term cash investments		918		966		1,431		954
Cash and bank		555		624		724		804
Total current assets		4,532		4,544		4,808		4,725
Total assets		5,180		5,134		5,380		5,236
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity		1,429		1,684		2,026		1,663
Minority interest		50		35		64		70
Total equity		1,480		1,719		2,090		1,733
Total long-term liabilities		39		25		26		22
Accounts payable		1,453		1,436		1,263		1,602
Other current liabilities		2,208		1,954		2,001		1,879
Total current liabilities		3,661		3,390		3,264		3,481
Total shareholders’ equity and liabilities		5,180		5,134		5,380		5,236
Net cash*		1,374		1,591		2,155		1,758

 

*	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

 

		Jul-Sep
EUR million		2008		2007
OPERATIONS
Net income		-25		267
Adjustments to reconcile net income to cash		39		32
		15		299
Changes in operating net assets		88		88
Cash flow from operating activities		102		387
INVESTMENTS
Investing activities		-55		-53
Cash flow from investing activities		-55		-53
FINANCING
Financing activities		- 238		- 300
Cash flow from financing activities		-238		-300
Net change in cash		-191		34
Cash, beginning of period		1,591		1,730
Translation difference in Cash		74		-6
Cash, end of period		1,473		1,758

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS

 

		Jan-Sep
EUR million		2008		2007
OPERATIONS
Net income		114		741
Adjustments to reconcile net income to cash		109		90
		223		831
Changes in operating net assets		-155		-349
Cash flow from operating activities		68		482
INVESTMENTS
Investing activities		-105		-138
Cash flow from investing activities		-105		-138
FINANCING
Financing activities		- 708		-849
Cash flow from financing activities		-708		-849
Net change in cash		-745		-504
Cash, beginning of period		2,155		2,273
Translation difference in Cash		62		-11
Cash, end of period		1,473		1,758

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

 

		2008						2007
EUR million		Jul-Sep		Apr-Jun		Jan-Mar		Oct-Dec		Jul-Sep		Apr-Jun		Jan-Mar
OPERATIONS
Net income		-25		6		133		373		267		220		254
Adjustments to reconcile net income to cash		39		40		31		17		32		30		28
		15		46		164		390		299		250		282
Changes in operating net assets		88		-142		-101		44		88		16		-454
Cash flow from operating activities		102		-96		64		434		387		266		-172
INVESTMENTS
Investing activities		-55		-29		-22		-27		-53		-31		-53
Cash flow from investing activities		-55		-29		-22		-27		-53		-31		-53
FINANCING
Financing activities		- 238		- 8		- 462		0		- 300		- 548		- 1
Cash flow from financing activities		-238		-8		-462		0		-300		-548		-1
Net change in cash		-191		-133		-421		408		34		-312		-226
Cash, beginning of period		1,591		1,711		2,155		1,758		1,730		2,045		2,273
Translation difference in Cash		74		13		-24		-10		-6		-3		-2
Cash, end of period		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		Q3			Q2			Q1			Q4			Q3			Q2			Q1
Europe, Middle East & Africa *		1,427			1,386			1,494			2,251			1,715			1,729			1,598
Americas		703			740			486			636			573			499			365
Asia		678			694			722			884			820			885			961
Total		2,808			2,820			2,702			3,771			3,108			3,112			2,925
* of which Western Europe		947			900			979			1,569			1,103			1,102			1,078
		2008									2007
Sequential change (%)		Q3			Q2			Q1			Q4			Q3			Q2			Q1
Europe, Middle East & Africa *		3	%		-7	%		-34	%		31	%		-1	%		8	%		-26	%
Americas		-5	%		52	%		-24	%		11	%		15	%		37	%		-34	%
Asia		-2	%		-4	%		-18	%		8	%		-7	%		-8	%		-11	%
Total		0	%		4	%		-28	%		21	%		0	%		6	%		-23	%
* of which Western Europe		5	%		-8	%		-38	%		42	%		0	%		2	%		-27	%
		2008									2007
Year over year change (%)		Q3			Q2			Q1			Q4			Q3			Q2			Q1
Europe, Middle East & Africa *		-17	%		-20	%		-7	%		5	%		7	%		59	%		55	%
Americas		23	%		48	%		33	%		15	%		37	%		52	%		46	%
Asia		-17	%		-21	%		-25	%		-18	%		-8	%		4	%		35	%
Total		-10	%		-9	%		-8	%		0	%		7	%		37	%		47	%
* of which Western Europe		-14	%		-18	%		-9	%		6	%		-1	%		47	%		60	%
		2008									2007
Year to date		0809			0806			0803			0712			0709			0706			0703
Europe, Middle East & Africa *		4,324			2,879			1,494			7,293			5,042			3,328			1,598
Americas		1,930			1,226			486			2,072			1,436			864			365
Asia		2,076			1,416			722			3,550			2,666			1,846			961
Total		8,330			5,522			2,702			12,916			9,145			6,037			2,925
* of which Western Europe		2,826			1,879			979			4,852			3,283			2,179			1,078
		2008									2007
YTD year over year change (%)		0809			0806			0803			0712			0709			0706			0703
Europe, Middle East & Africa *		-14	%		-13	%		-7	%		24	%		36	%		57	%		55	%
Americas		34	%		42	%		33	%		34	%		44	%		49	%		46	%
Asia		-22	%		-23	%		-25	%		0	%		8	%		18	%		35	%
Total		-9	%		-9	%		-8	%		18	%		27	%		42	%		47	%
* of which Western Europe		-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: October 17, 2008