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TBR 2Q11 Ericsson Initial Response Report
 

TBR 2Q11 Ericsson Initial Response Report

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Technology Business Research is a different kind of research company. Our bottoms-up approach provides a look at the technology industry unlike anything you’ve seen before. We analyze company ...

Technology Business Research is a different kind of research company. Our bottoms-up approach provides a look at the technology industry unlike anything you’ve seen before. We analyze company performance in professional services, networking and mobility, computing and hardware, and software on a quarterly basis, leveraging our data to create industry benchmarks and landscapes that provide a business perspective on leaders and laggards and their business plans. We are experts in the business of technology.

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    TBR 2Q11 Ericsson Initial Response Report TBR 2Q11 Ericsson Initial Response Report Presentation Transcript

    • NETWORK BUSINESS QUARTERLYSM1Q11 INITIAL RESPONSETelefon AB LM EricssonFirst Calendar Quarter 2011First Fiscal Quarter 2011 Ended March 31, 2011Publish Date: April 27, 2011Author: Chris Antlitz (chris.antlitz@tbri.com), NMP AnalystContent Editor: Scott Dennehy, NMP Senior Analyst TBR T E C H N O L O G Y B U S I N E S S R ES E AR C H , I N C .
    • Executive Summary TBR Ericsson’s Networks unit powered nearly all of the company’s top-line growth and margin expansion in 1Q11 TBR Position Company Objectives While the Networks business rides high, Ericsson is Leverage managed services business to build long- building out its services and multimedia portfolios to term recurring revenue model harness growth from emerging trends, such as cloud, Ericsson signed nine new managed services contracts mobile wallet, M2M and OSS/BSS evolution. in 1Q11, five of which were extensions or expansions • Alliances with Akamai and Vantrix will help Ericsson of legacy contracts. accelerate its move into the cloud and mobile video. Drive new initiatives and offerings to build traction • The acquisition of Telenor Connexion’s M2M for its “Networked Society” strategy platform adds critical assets that enable and manage connected devices. • Mobility, broadband and cloud form the core of Ericsson’s “Networked Society” strategy. • The company has made a series of announcementsTBR ERICSSON PROFITABILITY AND GROWTH TBR to build momentum for its strategy, namely a 70,000 20% device connection platform for machine-to- 60,000 15% machine (M2M) solutions, mobile money services and an antenna integrated radio, all targeted at the In SEK Mi l lions 50,000 10% 40,000 cloud-based service delivery model. 5% 30,000 • Ericsson also announced an alliance with Akamai 20,000 0% Technologies to provide mobile cloud acceleration 10,000 -5% solutions. 0 -10% Mitigate effect of parts shortages and rectify logistical 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est. and supply chain problems Total Revenue Gross Profit Ericsson limited its reliance on supplies from Japan Operating Profit Year-to-Year Revenue Growth by bolstering its involvement with secondary SOURCE: TBR ESTIMATES AND ERICSSON suppliers and entering the spot market to satisfy its component needs. 2 Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc.
    • Executive Summary TBRMany LTE contracts will be awarded in 2011 following a wave of trials in2010, auguring well for sustained growth in Ericsson’s Networks business Key Developments • The Networks unit was the guiding force behind Ericsson’s excellent quarter in 1Q11, as Networks unit the company’s top-line growth and more than doubling of operating margin was pushing Ericsson attributed to equipment sales. forward as Global • The broad global economic recovery is pushing operators to open the spigots and make Services and critical investments in their networks. Sales of the RBS 6000, packet core, IP routers, Multimedia falter and microwave backhaul were the fastest-growing areas under Ericsson’s equipment umbrella. • Major LTE contracts with operators like AT&T, Verizon and Vodafone Germany continue to ramp up, while a raft of new contracts are expected to be finalized in coming LTE will drive quarters following a wave of trials. growth in Networks • With nearly 50% market share in LTE and that addition of TD-LTE solutions to its unit arsenal, Ericsson is well-positioned to help any operator roll out an LTE network. This cycle of LTE investment will spur equipment sales and drive services revenues as these new and complex networks require professional and deployment services. • Ericsson has been relatively unscathed by the tragedy in Japan. Only a few parts have been delayed due to the disaster, but Ericsson has quickly remedied the problem by Disaster in Japan ramping up orders to its secondary suppliers and using alternative components in its had a marginal hardware. impact on supply • Revenue in Japan even increased during the quarter and became Ericsson’s second- chain largest country by sales at 8%, up from 4% in 1Q10. TBR believes sales to Japan could remain strong in coming quarters as the country injects stimulus into the economy to begin rebuilding.3 Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc.
    • Executive Summary TBR Services sales declined on unfavorable currency and fewer SI projects, while Multimedia continues its search for a sustainable growth catalyst Segment Revenue Performance and Strategies • Equipment growth was broad-based but ERICSSON REVENUE BY SEGMENT Networks skewed toward wireless and IP routing TBR 3,469 60,000 SEK 33.2 products. 2,282 50,000 2,310 2,420 2,318 22,869 billion • Growth in wireless infrastructure In SEK Mi l lions 40,000 20,080 19,076 17,435 (or $4.9 spanned 2G, 3G and LTE technologies as 18,098 30,000 billion) operators sought to expand coverage and 20,000 24,704 25,472 26,087 36,445 33,249 capacity. 10,000 0 • Global Services revenue declined 3.7% 1Q10 2Q10 3Q10 4Q10 1Q11 Global from 1Q10 on weak sales of professional Multimedia Global Services Networks Services services, particularly systems integration. SOURCE: TBR AND ERICSSON SEK 17.4 • Managed services and rollout were flatTBR ERICSSON 1Q11 SEGMENT REVENUE GROWTH billion year-to-year as contracts waited to ramp TBR 54,000 $17 (or $2.6 and parts delays stalled the completion $680 52,000 $28 billion) of outstanding deployments. As such, these segments should see growth in In SEK Mi l lions 50,000 $8,545 coming quarters. 48,000 $52,966 46,000 Ericsson’s multimedia division continues to Multimedia build capabilities primarily through 44,000 $45,112 42,000 SEK 2.3 partnerships. In addition to the Vantrix 1Q10 Networks Professional Network Multimedia 1Q11 Revenue billion alliance for mobile video optimization and Revenue Services Rollout (or $337 delivery, Ericsson is collaborating with SOURCE: TBR AND ERICSSON million) Polycom to enable operators to deliver hosted telepresence services. 4 Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc.
    • Financial Model Strategy TBRGross margin rose to 38.5%, allaying concerns that 3G sales in Indiawould cause aggregate margins to contract TBR Revenues TBR ERICSSON OPERATING EXPENSES 60,000 Ericsson’s top-line revenue advanced 17.4% year- 8,592 50,000 to-year to SEK 53 billion (or $7.8 billion) thanks to In SEK Mi l lions 7,131 7,991 7,751 the Networks unit, as Global Services and 40,000 7,526 7,689 6,441 7,008 7,158 5,775 Multimedia were weak. 30,000 40,995 Expenses 20,000 28,527 30,235 29,337 32,578 • The inclusion of LG-Ericsson and a push into 10,000 TD-LTE caused R&D and SG&A to grow over 10% 0 1Q10 2Q10 3Q10 4Q10 1Q11 year-to-year at constant currency. Research & Development SG&A Cost of Sales • Still, opex as a percentage of revenue remains SOURCE: TBR AND ERICSSON several hundred basis points below 1Q10 levels, TBR indicating Ericsson’s cost rationalization and TBR ERICSSON ADJUSTED OPERATING MARGIN restructuring initiatives are working. BY SEGMENT 20% Margins 15% • Gross margin increased 170 basis points year-to- 10% year to 38.5% on favorable equipment mix, a 5% 0% good balance between network expansions and -5% upgrades, and efficiency gains in production. -10% • Aggregate adjusted operating margin more than -15% doubled from 4.4% in 1Q10 to 11% in 1Q11 due -20% 1Q10 2Q10 3Q10 4Q10 1Q11 to improvement in Networks profitability. Networks operating margin nearly tripled from a Networks Global Services Multimedia year ago to 17.3%. SOURCE: TBR AND ERICSSON5 Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc.
    • Go to Market & Product Strategies TBREricsson makes further in-roads in TD-LTE, while raising the stakesin mobile payment and cloud services markets Key Developments • Ericsson was approved by the Chinese Ministry of Industry and Information Technology (MIIT) to conduct a TD-LTE trial for China Mobile in the city of Shenzhen. Most vendors, including Huawei and Networks ZTE, are vying for a piece of the 4G investment cycle in China. • Though Chinese operators are still putting the finishing touches on their 3G networks and bulking up capacity on their 2G networks, all three incumbent carriers – China Mobile, Unicom and Telecom – are starting to seriously look into 4G for their long-term strategies. TBR expects these TD-LTE trials to ensue during 2011 and 2012, with the first commercial deployments taking place in 2013. • To address growth in mobile video, Ericsson announced a partnership in March with Vantrix, a provider focused on mobile video optimization and delivery. The company will bundle Vantrix’s Bandwidth Optimizer with its own Multiservice Proxy mobile broadband traffic optimization solution to help manage and improve quality-of-experience over mobile networks. • The multimedia division continues to build capabilities primarily through partnerships to boost its Multimedia prospects in the market. In addition to the Vantrix alliance for mobile video optimization and delivery, Ericsson is collaborating with Polycom to enable operators to deliver hosted telepresence services. • Ericsson launched its own version of mobile banking services in February. The company’s Money Services and Money Interconnect Service will enable operators and financial institutions to offer their services using a real-time, cross-border, cross-currency switching network. • Ericsson is late to this market compared to competitors who launched in 2010, but TBR believes the additional effort taken to test and fulfill some of the regulatory and legal requirements, in close collaboration with operator customers, will ensure rapid uptake in the target markets.6 Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc.
    • Go to Market & Product Strategies TBREricsson is readying its services arm for the 50 billion devices it projectswill be connected to global networks by 2020Key Developments • Ericsson’s global services strategy seeks to position the company as a one-stop M2M shop, with end-to-end solutions, capable of helping operators modernize their networks to meet current and future data trafficGlobal Services demands from these connected devices. • To this end, the company made aggressive attempts to enhance its cloud services by launching its Device Connection Platform, a solution for cloud-based M2M services. • In April, Ericsson followed the platform launch with the acquisition of Telenor Connexion, a MVNO that was wholly owned by Telenor Group of Norway. Telenor Connexion will support its existing M2M service using Ericsson’s new platform. • While unit shipments continue to fall due to weak demand for feature phones, average selling price (ASP) is on the rise as sales mix skews increasingly toward smartphones. Sony-Ericsson’s all-in bet on Android and itsSony Ericsson aggressive stance on costs has returned the joint venture to profitability and puts it on track for steady margin improvement. • In 1Q11, over 60% of Sony-Ericsson’s total sales were from smartphones. The company hopes that number will grow quickly as it pushes to expand its presence in the United States. • Unlike parent company Ericsson, Sony-Ericsson is being adversely affected by the events in Japan, which have limited its access to high-end LCD screens, batteries and circuit boards for its devices. TBR believes the full impact of these issues will be reflected in 2Q11 results. • Despite several rounds of restructuring and reorganization, ST-Ericsson still cannot stem revenue declines andST-Ericsson operating losses. Sales plunged 27% year-to-year to $444 million and operating losses widened as volume fell. • The joint venture is undergoing a product shift away from legacy technologies and toward new, higher-value chipsets. Though this transition must occur to keep the unit viable, funds are running out and decisions will have to be made by the parent companies on how to proceed. 7 Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc.
    • Resource Management Strategy TBREricsson is focusing a portion of its R&D spend on TD-LTE solutions, whichwill be marketed to operators in APAC as an alternative to FDD-LTEInvestments/R&D Focus Personnel ChangesEricsson’s April acquisition of Telenor • Ericsson ended 1Q11 with 91,546 employees, upConnexion’s M2M platform signals the vendor 1,285, or 5.8%, year-to-year. Headcount reductionsis gearing up to make a push in the were concentrated in Scandinavia and Westernmanagement of connected devices. Ericsson Europe, in line with the company’s resource shift towill merge Connexion’s platform with its lower-cost regions like BRIC and Eastern Europe.homegrown Device Connection Platform to • Fredrik Jejdling was appointed as Ericsson’s new headcreate customized M2M services for of operations in India, Nepal and Bhutan, effectiveenterprises. June 1, 2011. Jejdling replaces Gowton Achibar, who will take on new responsibilities within Ericsson. TBR ERICSSON EMPLOYEE HEADCOUNT BY GEOGRAPHIC REGION 100,000 Ericsson’s 7,394 6,150 6,353 7,181 Worldwide Operations 6,134 Number of Employees 80,000 17,196 18,057 20,007 20,936 22,045 60,000 49,757 49,349 40,000 The most aggressive hiring took 48,270 48,646 48,576 place in India – up 738 positions 20,000 year-to-year to total nearly 7,500. 13,450 13,857 13,430 13,498 13,531 0 1Q10 2Q10 3Q10 4Q10 1Q11 CALA APAC EMEA North America SOURCE: TBR AND ERICSSON8 Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc.
    • Income Statement TBR ERICSSON Consolidated Income Statement TBR (In Thous a nds Swedi s h Kronor (SEK)) FISCAL QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est. CALENDAR QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est. Revenue 45,112,000 47,972,000 47,481,000 62,783,000 52,966,000 57,086,680 Cost of Sales 28,527,000 30,235,000 29,337,000 40,995,000 32,578,000 35,000,000 Gross Profit 16,585,000 17,737,000 18,144,000 21,788,000 20,388,000 22,086,680 Research and Development 7,526,000 7,751,000 7,689,000 8,592,000 7,991,000 8,005,750 Selling and General Administrative 7,008,000 7,158,000 5,775,000 7,131,000 6,441,000 7,000,000 Other Operating Revenue and Costs 302,000 500,000 620,000 581,000 343,000 511,000 Share in Earnings of Joint Ventures (372,000) (308,000) (90,000) (402,000) (468,000) (317,000) Operating Income 1,981,000 3,020,000 5,210,000 6,244,000 5,831,000 7,274,930 Financial Income 278,000 470,000 168,000 131,000 302,000 267,750 Financial Expenses (438,000) (596,000) (302,000) (383,000) (306,000) (396,750) Income before Taxes 1,821,000 2,894,000 5,076,000 5,992,000 5,827,000 7,145,930 Provision for (Benefit from) Income Taxes 547,000 867,000 1,523,000 1,611,000 1,747,000 2,143,779 Net Income 1,274,000 2,027,000 3,553,000 4,381,000 4,080,000 5,002,151 PERCENTAGE OF REVENUE Revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Cost of Sales 63.2% 63.0% 61.8% 65.3% 61.5% 61.3% Gross Margin 36.8% 37.0% 38.2% 34.7% 38.5% 38.7% Research and Development 16.7% 16.2% 16.2% 13.7% 15.1% 14.0% Selling and General Administrative 15.5% 14.9% 12.2% 11.4% 12.2% 12.3% Share in Earnings of Joint Ventures -0.8% -0.6% -0.2% -0.6% -0.9% -0.6% Operating Margin 4.4% 6.3% 11.0% 9.9% 11.0% 12.7% Financial Income 0.6% 1.0% 0.4% 0.2% 0.6% 0.5% Financial Expenses -1.0% -1.2% -0.6% -0.6% -0.6% -0.7% Income before Taxes 4.0% 6.0% 10.7% 9.5% 11.0% 12.5% Provision for (Benefit from) Income Taxes 1.2% 1.8% 3.2% 2.6% 3.3% 3.8% Net Margin 2.8% 4.2% 7.5% 7.0% 7.7% 8.8% YEAR-TO-YEAR GROWTH Revenue -9.0% -8.0% 2.3% 7.6% 17.4% 19.0% Cost of Sales -10.7% -12.4% -3.7% 4.2% 14.2% 15.8% Gross Profit -5.8% 0.7% 13.6% 14.7% 22.9% 24.5% Research and Development 6.3% -8.3% -6.4% -7.7% 6.2% 3.3% Selling and General Administrative 2.1% -3.8% 9.4% -2.6% -8.1% -2.2% Share in Earnings of Joint Ventures 83.4% 85.6% 94.2% 72.5% -25.8% -2.9% Operating Income 11.6% 149.0% 355.4% 249.6% 194.3% 140.9% Financial Income -77.9% 11650.0% -43.2% -58.3% 8.6% -43.0% Financial Expenses 4.2% -654.4% -2.7% 46.7% 30.1% 33.4% Income before Taxes -29.4% 154.3% 342.9% 333.9% 220.0% 146.9% Provision for (Benefit from) Income Taxes -26.6% 154.3% 307.2% 145.6% 219.4% 147.3% Net Income -30.5% 154.3% 360.2% 504.3% 220.3% 146.8% SOURCE: TBR ESTIMATES AND ERICSSON * Restated according to IFRS and IAS regulations9 Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc.
    • Income Statement TBR ERICSSON Consolidated Income Statement TBR (In $ Thous a nds ) FISCAL QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est. CALENDAR QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est. Revenue $ 6,354,927 $ 6,351,013 $ 6,531,486 $ 9,268,654 $ 7,819,371 $ 8,427,707 Cost of Sales 4,018,598 4,002,812 4,035,598 6,052,092 4,809,490 5,167,050 Gross Profit 2,336,329 2,348,201 2,495,889 3,216,562 3,009,880 3,260,657 Research and Development 1,060,188 1,026,155 1,057,699 1,268,437 1,179,711 1,181,889 Selling and General Administrative 987,217 947,648 794,409 1,052,750 950,885 1,033,410 Other Operating Revenue and Costs 42,543 66,195 85,287 85,773 50,637 75,439 Share in Earnings of Joint Ventures -52,404 -40,776 -12,380 -59,347 -69,091 -46,799 Operating Income 279,063 399,818 716,688 921,802 860,831 1,073,998 Financial Income 39,162 62,223 23,110 19,340 44,584 39,528 Financial Expenses -61,701 -78,904 -41,543 -56,542 -45,175 -58,572 Income before Taxes 256,524 383,137 698,255 884,599 860,240 1,054,954 Provision for (Benefit from) Income Taxes 77,056 114,782 209,504 237,832 257,910 316,486 Net Income 179,468 268,355 488,751 646,767 602,330 738,468 PERCENTAGE OF REVENUE Revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Cost of Sales 63.2% 63.0% 61.8% 65.3% 61.5% 61.3% Gross Margin 36.8% 37.0% 38.2% 34.7% 38.5% 38.7% Research and Development 16.7% 16.2% 16.2% 13.7% 15.1% 14.0% Selling and General Administrative 15.5% 14.9% 12.2% 11.4% 12.2% 12.3% Share in Earnings of Joint Ventures -0.8% -0.6% -0.2% -0.6% -0.9% -0.6% Operating Margin 4.4% 6.3% 11.0% 9.9% 11.0% 12.7% Financial Income 0.6% 1.0% 0.4% 0.2% 0.6% 0.5% Financial Expenses -1.0% -1.2% -0.6% -0.6% -0.6% -0.7% Income before Taxes 4.0% 6.0% 10.7% 9.5% 11.0% 12.5% Provision for (Benefit from) Income Taxes 1.2% 1.8% 3.2% 2.6% 3.3% 3.8% Net Margin 2.8% 4.2% 7.5% 7.0% 7.7% 8.8% YEAR-TO-YEAR GROWTH Revenue -9.0% -8.0% 2.3% 7.6% 17.4% 19.0% Cost of Sales -10.7% -12.4% -3.7% 4.2% 14.2% 15.8% Gross Profit -5.8% 0.7% 13.6% 14.7% 22.9% 24.5% Research and Development 6.3% -8.3% -6.4% -7.7% 6.2% 3.3% Selling and General Administrative 2.1% -3.8% 9.4% -2.6% -8.1% -2.2% Share in Earnings of Joint Ventures 83.4% 85.6% 94.2% 72.5% -25.8% -2.9% Operating Income 11.6% 149.0% 355.4% 249.6% 194.3% 140.9% Financial Income -77.9% 11650.0% -43.2% -58.3% 8.6% -43.0% Financial Expenses 4.2% -654.4% -2.7% 46.7% 30.1% 33.4% Income before Taxes -29.4% 154.3% 342.9% 333.9% 220.0% 146.9% Provision for (Benefit from) Income Taxes -26.6% 154.3% 307.2% 145.6% 219.4% 147.3% Net Income -30.5% 154.3% 360.2% 504.3% 220.3% 146.8% SOURCE: TBR ESTIMATES AND ERICSSON * Restated according to IFRS and IAS regulations10 Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc.
    • Balance Sheet TBR ERICSSON Consolidated Balance Sheet (In Thous a nds Swedi s h Kronor (SEK)) TBR FISCAL QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11 CALENDAR QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11 ASSETS Cash, Equivalents, and Short-Term Investments 77,855,000 67,590,000 76,174,000 87,150,000 83,042,000 Inventories, Net 24,126,000 29,397,000 30,304,000 29,897,000 32,146,000 Accounts Receivable - Trade 62,695,000 69,385,000 57,831,000 61,127,000 60,622,000 Short-term Customer Financing 1,885,000 2,132,000 2,251,000 3,123,000 2,713,000 Other Receivables 15,853,000 17,429,000 18,705,000 17,146,000 19,745,000 Total Current Assets 182,414,000 185,933,000 185,265,000 198,443,000 198,268,000 Tangible Assets (P,P&E) 9,319,000 9,810,000 9,290,000 9,434,000 9,171,000 Intangible Assets 46,934,000 49,510,000 46,405,000 46,819,000 44,217,000 Equity in Associated Companies 11,286,000 11,596,000 10,079,000 9,803,000 8,662,000 Other Investments 240,000 266,000 276,000 219,000 239,000 Long-term Customer Financing 979,000 969,000 1,246,000 1,281,000 1,440,000 Deferred Tax Assets 14,710,000 16,053,000 14,208,000 12,737,000 13,090,000 Other Long-term Receivables 1,948,000 2,692,000 2,466,000 3,079,000 3,020,000 Total Non-current Assets 85,416,000 90,896,000 83,970,000 83,372,000 79,839,000 Total Assets 267,830,000 276,829,000 269,235,000 281,815,000 278,107,000 LIABILITIES AND EQUITY Interest-bearing Liabilities 2,017,000 3,797,000 4,353,000 3,808,000 4,676,000 Accounts Payable 17,806,000 20,266,000 20,724,000 24,959,000 24,849,000 Other Current Liabilities 64,230,000 69,113,000 62,980,000 67,996,000 64,621,000 Total Current Liabilities 84,053,000 93,176,000 88,057,000 96,763,000 94,146,000 Pensions & Provisions 8,061,000 8,498,000 8,075,000 5,445,000 4,278,000 Long-term Liabilities 34,263,000 34,731,000 34,034,000 32,822,000 31,981,000 Total Liabilities 126,377,000 136,405,000 130,166,000 135,030,000 130,405,000 Minority Interest in Equity of Consolidated Subsidiaries 1,163,000 2,115,000 1,674,000 1,679,000 1,560,000 Total Stockholders Equity 140,290,000 138,309,000 137,395,000 145,106,000 146,142,000 Total Liabilities and Equity 267,830,000 276,829,000 269,235,000 281,815,000 278,107,000 FINANCIAL RATIOS Days Sales Outstanding 125.08 130.17 109.62 87.63 103.01 Turns on Inventory 4.87 4.52 3.93 5.45 4.20 Fixed Asset Turnover (Tangible Assets) 19.07 20.06 19.89 26.82 22.77 Days Inventory Outstanding 74.92 80.77 92.85 67.00 86.89 Days Cash Outstanding 155.32 126.81 144.39 124.93 141.11 Total Asset Turnover 0.67 0.70 0.70 0.91 0.76 Debt/Asset Ratio 0.47 0.49 0.48 0.48 0.47 Current Ratio 2.17 2.00 2.10 2.05 2.11 Return on Assets 1.3% 1.8% 2.8% 4.1% 5.1% Return on Equity 2.5% 3.4% 5.5% 8.0% 9.9% Annualized Revenue per Employee (SEK) 2,457,634 2,334,727 2,309,391 2,308,995 2,364,554 Annualized Revenue per Employee ($US) $ 346,207 $ 309,094 $ 317,680 $ 340,877 $ 349,079 SEK to $ Conversion Rate 0.14087 0.13239 0.13756 0.14763 0.14763 Employee Count 86,537 87,413 88,060 90,261 91,546 SOURCE: TBR AND ERICSSON11 Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc.
    • Balance Sheet TBR ERICSSON Consolidated Balance Sheet (In $ Thous a nds ) TBR FISCAL QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11 CALENDAR QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11 ASSETS Cash and Equivalents $ 10,967,434 $ 8,948,240 $ 10,478,495 $ 12,865,955 $ 12,259,490 Inventories, Net 3,398,630 3,891,869 4,168,618 4,413,694 4,745,714 Accounts Receivable - Trade 8,831,845 9,185,880 7,955,232 9,024,179 8,949,626 Short-term Customer Financing 265,540 282,255 309,648 461,048 400,520 Other Receivables 2,233,212 2,307,425 2,573,060 2,531,264 2,914,954 Total Current Assets 25,696,660 24,615,670 25,485,053 29,296,140 29,270,305 Tangible Assets (P,P&E) 1,312,768 1,298,746 1,277,932 1,392,741 1,353,915 Intangible Assets 6,611,593 6,554,629 6,383,472 6,911,889 6,527,756 Equity in Associated Companies 1,589,859 1,535,194 1,386,467 1,447,217 1,278,771 Other Investments 33,809 35,216 37,967 32,331 35,284 Long-term Customer Financing 137,912 128,286 171,400 189,114 212,587 Deferred Tax Assets 2,072,198 2,125,257 1,954,452 1,880,363 1,932,477 Other Long-term Receivables 274,415 356,394 339,223 454,553 445,843 Total Non-current Assets 12,032,552 12,033,721 11,550,913 12,308,208 11,786,632 Total Assets 37,729,212 36,649,391 37,035,967 41,604,348 41,056,936 LIABILITIES AND EQUITY Interest-bearing Liabilities 284,135 502,685 598,799 562,175 690,318 Accounts Payable 2,508,331 2,683,016 2,850,793 3,684,697 3,668,458 Other Current Liabilities 9,048,080 9,149,870 8,663,529 10,038,249 9,539,998 Total Current Liabilities 11,840,546 12,335,571 12,113,121 14,285,122 13,898,774 Pensions & Provisions 1,135,553 1,125,050 1,110,797 803,845 631,561 Long-term Liabilities 4,826,629 4,598,037 4,681,717 4,845,512 4,721,355 Total Liabilities 17,802,728 18,058,658 17,905,635 19,934,479 19,251,690 Minority Interest in Equity of Consolidated Subsidiaries 163,832 280,005 230,275 247,871 230,303 Total Stockholders Equity 19,762,652 18,310,729 18,900,056 21,421,999 21,574,943 Total Liabilities and Equity 37,729,212 36,649,391 37,035,967 41,604,348 41,056,936 FINANCIAL RATIOS Days Sales Outstanding 125.08 130.17 109.62 87.63 103.01 Turns on Inventory 4.87 4.52 3.93 5.45 4.20 Fixed Asset Turnover (Tangible Assets) 19.07 20.06 19.89 26.82 22.77 Days Inventory Outstanding 74.92 80.77 92.85 67.00 86.89 Days Cash Outstanding 155.32 126.81 144.39 124.93 141.11 Total Asset Turnover 0.67 0.70 0.70 0.91 0.76 Debt/Asset Ratio 0.47 0.49 0.48 0.48 0.47 Current Ratio 2.17 2.00 2.10 2.05 2.11 Return on Assets 1.3% 1.8% 2.8% 4.1% 5.1% Return on Equity 2.5% 3.4% 5.5% 8.0% 9.9% Annualized Revenue per Employee ($US) $ 346,207 $ 309,094 $ 317,680 $ 340,877 $ 349,079 Employee Count 86,537 87,413 88,060 90,261 91,546 SOURCE: TBR AND ERICSSON12 Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc.
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