FOURTH QUARTER REPORT 2008 1

FOURTH QUARTER REPORT 2008 Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 1

FOURTH QUARTER REPORT HENRY STÉNSON Senior Vice President Communications 2008 2 Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 2

FOURTH QUARTER REPORT 2008 This presentation contains forward looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read our earnings reports and our most recent annual report for a better understanding of these risks and uncertainties. Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 3

FOURTH QUARTER REPORT CARL-HENRIC SVANBERG President and CEO 2008 Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 4

Telecom in 2008 4 billion mobile subscriptions A significant milestone Mobile broadband breakthrough New set of smart phones and players HSPA PC modules new standard Accelerated focus on all-ip convergence Enables new services and reduces cost Financial crisis in focus Long-term positive fundamentals remains The mobile phone is the single most transformational tool for development in Africa J. Sachs, special advisor to UN Secretary General Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 5

Ericsson in 2008 Sales of SEK 208.9 (187.8) b, up 11% Operating income SEK 23.5 (23.5) b, excl Sony Ericsson Cash flow of SEK 24.0 (19.2) b, cash conversion 92% (66%) Net cash position SEK 34.7 (24.3) b Restructuring charges of SEK 6.7 b Board to propose dividend of SEK 1.85 per share Sony Ericsson significantly affected by economic slowdown Numbers exclude restructuring charges and Sony Ericsson Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 6

The global economic slowdown Financially strong operators, loaded networks, growing traffic Effects on the mobile network market should not be that significant So far hardly any effects on mobile network investments Unreasonable that this will continue throughout 2009 Handset market clearly affected Replacements affected but not usage This slide contains forward looking statements Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 7

Cost reductions 2008 completed Initial target of SEK 4.0 b, savings and charges Actual savings of SEK 6.5 b and charges of SEK 6.7 b Charges in Q4 of SEK 2.3 b Full savings effect from year-end 2008 Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 8

Continued cost reductions in 2009 Further restructuring charges of SEK 6-7 b Targeting savings of SEK 10 b by second half 2010 50/50 split of cost of sales and operating expenses Technology synergies and IP transformation Fewer software platforms and increased hardware reuse Strategy and capabilities to remain intact Consolidation of R&D sites, layoffs and fewer consultants Some 5,000 employees globally across all functions Of which some 1,000 employees in Sweden Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 9

Q4 in summary Strong fourth quarter sales SEK 67.0 (54.5) b Positive exchange rate effect Strong ending of the year in all regions Operating income SEK 9.2 (7.6) b Contribution from Sony Ericsson SEK -0.6 (2.3) b Capital gain of SEK 0.8 b from divestment of Symbian shares Cash flow SEK 7.0 (12.0) b All numbers exclude restructing charges Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 10

Regional Q4 comments Western Europe sales 5% YoY, -2% FY SEK m Growing demand for mobile broadband Services close to 50% of sales focus on managed services Strong performance in Germany, Denmark and Italy Positive currency impact Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 11

Regional Q4 comments Central Europe, Middle East, Africa sales 24% YoY, 9% FY SEK m High business activities has translated into sales growth Strong performance in Nigeria, Saudi Arabia, South Africa, Russia 2G as well as 3G rollouts and expansions Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 12

Regional Q4 comments Asia Pacific sales 49% YoY, 16% FY SEK m India Ericsson s largest and fastest growing market Japan and Indonesia strong, fifth and sixth largest markets 3G licenses issued in China rollout to start soon Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 13

Regional Q4 comments Latin America sales 16% YoY, 25% FY SEK m A good year with 3G as well as 2G expansions Mexico and Brazil strong development no financial effects yet 3G now established across region Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 14

Regional Q4 comments North America sales 13% YoY, 34% FY SEK m Consumer breakthrough for mobile broadband Continued HSPA rollouts and expansions Positive currency effects Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 15

FOURTH QUARTER REPORT 2008 HANS VESTBERG Executive Vice President and CFO Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 16 2009-01-29

Q4 financial highlights 1) Fourth quarter Third quarter Full year SEK b. 2008 1) 2007 % 2008 1) % 2008 1) 2007 % Net sales 67.0 54.5 23 % 49.2 36 % 208.9 187.8 11 % Gross margin 35.2% 36.1% - 37.0% - 36.8% 39.3% - Operating income 9.2 7.6 21 % 5.7 62 % 23.9 30.6-22 % Operating margin 13.7% 14.0% - 11.5% - 11.4% 16.3% - Operating margin ex Sony Ericsson 14.6% 9.8% - 11.5% - 11.3% 12.5% - Net sales up 11% year-over-year, limited currency impact Slight gross margin decline due to high completion of large buildouts Opex cost reductions offset by negative currency effects YoY 1) Excluding restructuring charges of SEK 3.0 b. Q4 2008, SEK 2.0 b. Q3, SEK 1.8 b. Q2 and SEK 0.8 b. Q1 Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 17

Q4 financial highlights Fourth quarter Third quarter Full year SEK b. 2008 2007 % 2008 % 2008 2007 % Income after financial items 9.5 1) 7.6 25% 6.2 1) 54% 24.8 1) 30.7-19% Net income 3) 3.9 2) 5.6-31% 2.8 2) 37% 11.3 2) 21.8-48% EPS, SEK 3) 1.21 2) 1.77-32% 0.89 2) 36% 3.52 2) 6.84-49% Cash flow from operating activities 7.0 12.0-3.8-24.0 19.2 - Continued positive cash flow development, SEK 24.0 (19.2) b YTD Cash conversion of 92% (66%) YTD Net income SEK 3.9 b - Restructuring charges of SEK 6.7 b - Negative contribution from Sony Ericsson SEK -1.3 (2.3) b 1) Excluding restructuring charges of SEK 3.0 b. Q4 2008, SEK 2.0 b. Q3, SEK 1.8 b. Q2 and SEK 0.8 b. Q1 2) Including restructuring charges 3) Attributable to stockholders of the Parent Company, excluding minority interest Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 18

Change in net cash 2008 SEK b. Dividend -8.0 b 24.3 +4.0-0.4 +2.3 +4.4 34.7 Change in net cash 10.4 b Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 19

Long-term debt maturity profile Q4 2008 SEK b. Back-up facility of USD 2 b (SEK ~15 b) available if needed Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 20

Networks Fourth quarter Third quarter Full year SEK b. 2008 1) 2007 % 2008 1) % 2008 1) 2007 % Net sales 45.8 37.5 22 % 33.0 39% 142.0 129.0 10% Of which network rollout 7.6 6.4 17 % 4.7 61% 21.5 18.5 16% EBITDA margin 17% 15% - 15% - 16% 19% - Operating margin 14% 10% - 11% - 11% 13% - Strong ending of the year continued market share gains Record deliveries for GSM 3G licenses in China and India Encouraging firsts in IP broadband portfolio Clear leadership in softswitch and blade cluster 1) Excluding effects from restructuring. Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 21

Multimedia Fourth quarter Third quarter Full year SEK b. 2008 1) 2007 % 2008 1) % 2008 1) 4) 2007 % Net sales 5.0 4.9 4% 4.4 14% 17.9 15.9 13% EBITDA margin 21% -3% - 12% 2) - 11% 4% - Operating margin 12% 3) -9% - 3% - 1% -1% - 21% growth year-over-year for comparable units in Q4 Economic slowdown impacting mobile platforms Good growth in Tandberg Television and revenue management Capital gain of SEK 0.8 b from sale of Symbian shares 1) Excluding effects from restructuring. 2)Affected by SEK 0.2 b due to changed allocation of capitalized development expenses in Q2 3) Including effects of divestment of shares in Symbian of SEK 0.8 b. 4) First quarter 2008 is restated for the transfer of the IPX operation from Professional Services to Multimedia Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 22

Professional Services Fourth quarter Third quarter Full year SEK b. 2008 1) 2007 % 2008 1) % 2008 1) 2) 2007 % Net sales 16.2 12.1 34% 11.8 38 % 49.0 42.9 14% Of which managed services 4.3 3.3 29 % 3.5 23 % 14.3 12.2 17 % EBITDA margin 19% 16 % - 19 % - 17 % 16 % - Operating margin 18 % 15 % - 16 % - 16 % 15 % - Strong growth across portfolio 11 new managed services contracts world leading position 250 m subscribers in managed operations - 60% in high-growth markets Healthy margins with positive effects from cost efficiency activities Leveraging scale in managed operations 1) Excluding effects from restructuring. 2) First quarter 2008 is restated for the transfer of the IPX operation from Professional Services to Multimedia. Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 23

Sony Ericsson Q4 Global economic slowdown leads to contracting consumer demand Sales of EUR 2,914 (3,771) m, down 23% year-over-year Income before taxes of EUR -133 (501) m Announced EUR 300 m opex reductions increased to EUR 480 m Successful rollout of Xperia, Cybershot C905 phones and PlayNow W595 W902 W302 G705 C905 F305 S302 X1 W705 Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 24

Management focus for 2009 Stay close to customers Prepare cost for tougher times Focus on margins and cash generation Tight operational governance Take advantage of opportunities to extend leadership Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 25

FOURTH QUARTER REPORT 2008 Q & A Copyright Telefon AB LM Ericsson 2009. All rights reserved FOURTH QUARTER REPORT 2008 26

Copyright Copyright Telefon Telefon AB AB LM LM Ericsson Ericsson 2008. 2009. All All rights rights reserved reserved FOURTH THIRD QUARTER REPORT 2008 2729 2008-07-22