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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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FORM 6-K

 

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REPORT OF FOREIGN ISSUER

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

July 11, 2007

 

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LM ERICSSON TELEPHONE COMPANY

(Translation of registrant’s name into English)

 

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Torshamnsgatan 23, Kista

SE-164 83, Stockholm, Sweden

(Address of principal executive offices)

 

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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 July 11, 2007 regarding “Sony Ericsson continues profitable growth and market share gains”.

 

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PRESS RELEASE		July 11, 2007

Sony Ericsson continues profitable growth and market share gains

Q2 Highlights:

 

•

Continued strong year-on-year volume growth of 59%

 

•

Income before tax grew 55% year-on-year to €327 million

 

•

Walkman® phone sales of 9 million in quarter sustain leadership in music phones

 

•

Expanded portfolio continues to generate market share gains

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the second quarter ended June 30, 2007 is as follows:

 

		Q2 2006			Q1 2007			Q2 2007
Number of units shipped (million)		15.7			21.8			24.9
Sales (Euro m.)		2,272			2,925			3,112
Gross Margin (%)		28.5	%		30.3	%		29.6	%
Operating Income (Euro m.)		203			346			315
Operating Income (%)		8.9	%		11.8	%		10.1	%
Income before taxes (Euro m.)		211			362			327
Net income (Euro m.)		143			254			220
Average Sales Price (Euro)		145			134			125

Units shipped in the quarter reached 24.9 million, a 59% increase compared to the same period last year, generating both year-on-year and sequential market share gains. Sales for the quarter were Euro 3,112 million, representing a year-on-year increase of 37%. Income before taxes for the quarter was Euro 327 million, representing a year-on-year increase of 55%. Net income for the quarter was Euro 220 million. In line with Sony Ericsson expectations, the increase in Q2 in low and mid-tier priced phones in the product portfolio resulted in a decline in ASP to Euro 125.

“Sony Ericsson has continued to capture market share in a more competitive market place with a product offering that addresses a wider consumer audience than ever before. Our financial results for Q2 2007 reflect our direction to build our brand in key imaging, music and multimedia categories with a portfolio that includes more competitively priced phones,” said Miles Flint, President of Sony Ericsson. “We expect the market in 2007 to remain competitive, but with recently announced products such as the flag-ship Walkman® and Cyber-shot™ models we aim to continue to grow faster than the market.”

During the quarter Sony Ericsson continued to capture market share in Latin America, Western Europe and CEEMEA (Central and Eastern Europe, Middle East, Africa) due to low and mid-tier feature phones such as the W300 and W200 Walkman^® phones and the K310 and Z310 phones. At the same time, the company continued to strengthen its product line up by announcing a large number of new products across a variety of price points, including the K850, an HSDPA, 5 mega-pixel flag-ship Cyber-shot™ phone, and the W960, a high-end Walkman® phone with 8GB of on-board storage.

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Following an announcement in January that Sony Ericsson would start the local manufacture of phones in India through its global manufacturing partners Flextronics and Foxconn, in Q2 the company extended its commitment to this important and rapidly growing market by announcing plans to establish its own research and development unit in Chennai later in the year.

In Q2 new trademark royalty fees were agreed with the parent companies, and these additional expenses were recorded for the first time in the second quarter.

Sony Ericsson forecasts that the 2007 global handset market will be above 1.1 billion units. The company grew market share in Q2 2007 around 3 percentage points to well over 9% compared with the same period last year.

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

EDITOR’S NOTES:

Financial Statements and Additional Information:

Financial Statements:

Consolidated Income Statement

Consolidated Income Statement – Year-to-Date

Consolidated Income Statement – Isolated Quarters

Consolidated Balance Sheet

Consolidated Statement of Cash Flows

Consolidated Statement of Cash Flows – Year-to-Date

Consolidated Statement of Cash Flows – Isolated Quarters

Additional Information:

Net Sales by Market Area by Quarter

- ENDS -

Sony Ericsson Mobile Communications serves the global communications market with innovative and feature-rich mobile phones, accessories and PC-cards. Established as a joint venture by Sony and Ericsson in 2001, with global corporate functions located in London, including R&D sites in Europe, Japan, China and America, Sony Ericsson celebrated the 5th anniversary of the start of the joint venture on 1st October, 2006. Sony Ericsson is the global title sponsor of the Women’s Tennis Association, and works with the Association to promote the Sony Ericsson WTA Tour in over 80 cities during the year. For more information on Sony Ericsson, please visit www.sonyericsson.com

CONTACTS:

 

Investors/Analysts
Ericsson Investor Relations		Sony Investor Relations
Gary Pinkham (Stockholm) +46 8 719 0858		Tatsuyuki Sonoda (Tokyo) +81 3 6748 2180
		Shinji Tomita (London) +44 207 444 9713
Press/Media
Sony Ericsson Corporate Communications
Aldo Liguori (London) +44 208 762 5860
Merran Wrigley (London) +44 208 762 5862

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

 

		Apr-Jun
EUR million		2007			2006			Change
Net sales		3,112			2,272			37	%
Cost of sales		-2,192			-1,625			35	%
Gross profit		921			647			42	%
Gross margin%		29.6	%		28.5	%		1	%
Research and development expenses		-283			-223			27	%
Selling and administrative expenses		-321			-246			30	%
Operating expenses		-604			-470			29	%
Other operating income, net		-2			26			-106	%
Operating income		315			203			55	%
Operating margin%		10.1	%		8.9	%		1	%
Financial income		18			8			120	%
Financial expenses		-6			0			-
Income after financial items		327			211			55	%
Taxes		-97			-64			53	%
Minority interest		-10			-5			112	%
Net income		220			143			54	%
Number of units shipped (million)		24.9			15.7			59	%
ASP (EUR)		125			145			-14	%

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Sony Ericsson

CONSOLIDATED INCOME STATEMENT

 

		Jan-Jun
EUR million		2007			2006			Change
Net sales		6,037			4,264			42	%
Cost of sales		-4,231			-3,094			37	%
Gross profit		1,806			1,170			54	%
Gross margin%		29.9	%		27.4	%		2	%
Research and development expenses		-544			-425			28	%
Selling and administrative expenses		-605			-433			40	%
Operating expenses		-1,149			-858			34	%
Other operating income, net		4			34			-89	%
Operating income		662			346			91	%
Operating margin%		11.0	%		8.1	%		3	%
Financial income		36			17			115	%
Financial expenses		-9			0			—
Income after financial items		689			363			90	%
Taxes		-197			-98			102	%
Minority interest		-18			-13			40	%
Net income		474			252			88	%
Number of units shipped (million)		46.7			29.0			61	%
ASP (EUR)		129			147			-12	%

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Sony Ericsson

CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS

 

		2007						2006
EUR million		Q2			Q1			Q4			Q3			Q2			Q1
Net sales		3,112			2,925			3,782			2,913			2,272			1,992
Cost of sales		-2,192			-2,039			-2,686			-1,995			-1,625			-1,469
Gross profit		921			886			1,096			917			647			524
Gross margin %		29.6	%		30.3	%		29.0	%		31.5	%		28.5	%		26.3	%
Research and development expenses		-283			-261			-256			-225			-223			-202
Selling and administrative expenses		-321			-284			-367			-287			-246			-186
Operating expenses		-604			-545			-623			-511			-470			-388
Other operating income, net		-2			5			10			21			26			7
Operating income		315			346			484			427			203			143
Operating margin %		10.1	%		11.8	%		12.8	%		14.6	%		8.9	%		7.2	%
Financial income		18			18			19			8			8			9
Financial expenses		-6			-2			0			-1			0			0
Income after financial items		327			362			502			433			211			151
Taxes		-97			-100			-43			-127			-64			-34
Minority interest		-10			-9			-12			-8			-5			-9
Net income		220			254			447			298			143			109
Number of units shipped (million)		24.9			21.8			26.0			19.8			15.7			13.3
ASP (EUR)		125			134			146			147			145			149

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Sony Ericsson

CONSOLIDATED BALANCE SHEET

 

EUR million		Jun 30 2007		Mar 31 2007		Dec 31 2006		Jun 30 2006
ASSETS
Total fixed and financial assets		498		495		469		311
Current assets
Inventories		477		498		437		318
Accounts receivables		1,831		1,566		1,653		1,101
Other assets		845		859		310		196
Other short-term cash investments		1,071		1,376		1,580		897
Cash and bank		659		668		693		698
Total current assets		4,882		4,968		4,673		3,210
Total assets		5,380		5,463		5,141		3,521
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity		1,702		2,033		1,781		1,048
Minority interest		63		55		45		59
Total equity		1,764		2,088		1,826		1,106
Total long-term liabilities		21		22		20		17
Accounts payable		1,371		1,316		1,276		954
Other current liabilities		2,224		2,037		2,019		1,444
Total current liabilities		3,595		3,353		3,296		2,398
Total shareholders’ equity and liabilities		5,380		5,463		5,141		3,521
Net cash*		1,729		2,045		2,272		1,556

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

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS

 

		Apr-Jun
EUR million		2007		2006
OPERATIONS
Net income		220		143
Adjustments to reconcile net income to cash		30		22
		250		165
Changes in operating net assets		16		18
Cash flow from operating activities		266		183
INVESTMENTS
Investing activities		-31		-29
Cash flow from investing activities		-31		-29
FINANCING
Financing activities		- 548		26
Cash flow from financing activities		-548		26
Net change in cash		-312		180
Cash, beginning of period		2,045		1,428
Translation difference in Cash		-3		-13
Cash, end of period		1,730		1,595

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS

 

		Jan-Jun
EUR million		2007		2006
OPERATIONS
Net income		474		252
Adjustments to reconcile net income to cash		58		42
		532		294
Changes in operating net assets		-437		71
Cash flow from operating activities		95		365
INVESTMENTS
Investing activities		-85		-72
Cash flow from investing activities		-85		-72
FINANCING
Financing activities		- 548		-210
Cash flow from financing activities		-548		-210
Net change in cash		-538		83
Cash, beginning of period		2,273		1,537
Translation difference in Cash		-5		-25
Cash, end of period		1,730		1,595

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

 

		Apr-Jun		Jan-Mar		Oct - Dec		Jul-Sep		Apr-Jun		Jan-Mar
EUR million		2007		2007		2006		2006		2006		2006
OPERATIONS
Net income		220		254		447		298		143		109
Adjustments to reconcile net income to cash		30		28		23		20		22		20
		250		282		470		318		165		129
Changes in operating net assets		16		-454		50		-21		18		53
Cash flow from operating activities		266		-172		520		297		183		182
INVESTMENTS
Investing activities		-31		-53		-26		-36		-29		-43
Cash flow from investing activities		-31		-53		-26		-36		-29		-43
FINANCING
Financing activities		- 548		- 1		- 66		- 2		26		- 236
Cash flow from financing activities		-548		-1		-66		-2		26		-236
Net change in cash		-312		-226		428		259		180		-97
Cash, beginning of period		2,045		2,273		1,861		1,595		1,428		1,537
Translation difference in Cash		-3		-2		-16		7		-13		-12
Cash, end of period		1,730		2,045		2,273		1,861		1,595		1,428

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Sony Ericsson

NET SALES BY MARKET AREA BY QUARTER

 

EUR million		2007						2006
Isolated quarters		Q2			Q1			Q4			Q3			Q2			Q1
Europe, Middle East & Africa *		1,729			1,598			2,145			1,600			1,090			1,029
Americas		499			365			555			417			328			250
Asia		885			961			1,082			896			853			713
Total		3,112			2,925			3,782			2,913			2,272			1,992
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* of which Western Europe		1,102			1,078			1,478			1,115			748			674
		2007						2006
Sequential change (%)		Q2			Q1			Q4			Q3			Q2			Q1
Europe, Middle East & Africa *		8	%		-26	%		34	%		47	%		6	%		-27	%
Americas		37	%		-34	%		33	%		27	%		31	%		-19	%
Asia		-8	%		-11	%		21	%		5	%		20	%		20	%
Total		6	%		-23	%		30	%		28	%		14	%		-14	%
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* of which Western Europe		2	%		-27	%		33	%		49	%		11	%		-35	%
		2007						2006
Year over year change (%)		Q2			Q1			Q4			Q3			Q2			Q1
Europe, Middle East & Africa *		59	%		55	%		52	%		35	%		43	%		71	%
Americas		52	%		46	%		79	%		77	%		53	%		53	%
Asia		4	%		35	%		83	%		42	%		33	%		36	%
Total		37	%		47	%		64	%		42	%		41	%		55	%
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* of which Western Europe		47	%		60	%		45	%		33	%		42	%		84	%
		2007						2006
Year to date		0706			0703			0612			0609			0606			0603
Europe, Middle East & Africa *		3,328			1,598			5,865			3,720			2,120			1,029
Americas		864			365			1,550			995			578			250
Asia		1,846			961			3,544			2,462			1,566			713
Total		6,037			2,925			10,959			7,177			4,264			1,992
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* of which Western Europe		2,179			1,078			4,014			2,537			1,422			674
		2007						2006
YTD year over year change (%)		0706			0703			0612			0609			0606			0603
Europe, Middle East & Africa *		57	%		55	%		48	%		46	%		56	%		71	%
Americas		49	%		46	%		68	%		62	%		53	%		53	%
Asia		18	%		35	%		48	%		37	%		35	%		36	%
Total		42	%		47	%		51	%		45	%		47	%		55	%
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* of which Western Europe		53	%		60	%		46	%		46	%		59	%		84	%

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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: July 11, 2007