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

July 18, 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 July 18, 2008, regarding Sony Ericsson’s second quarter report 2008.

 

 

 

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PRESS RELEASE		July 18, 2008

Sony Ericsson reports second quarter results

Q2 Highlights:

 

•

Break even results amid challenging market conditions and increased competition

 

•

Announcement of Open Mobile Software platform and Symbian Foundation

 

•

R&D investment continues

 

•

Alignment of operations to help restore profitable growth

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

 

		Q2 2007			Q1 2008			Q2 2008
Number of units shipped (million)		24.9			22.3			24.4
Sales (Euro m.)		3,112			2,702			2,820
Gross margin (%)		29.6	%		29.2	%		23.1	%
Operating income (Euro m.)		315			184			-2
Operating margin (%)		10.1	%		6.8	%		-0.1	%
Income before taxes (Euro m.)		327			193			8
Net income (Euro m.)		220			133			6
Average selling price (Euro)		125			121			116

Units shipped in the quarter were 24.4 million, in line with our June 27, 2008 interim announcement of 24 million units. Sales for the quarter were Euro 2,820 million, a decrease of 9% compared to the second quarter of 2007 due to unfavourable exchange rate fluctuation, continued slowing market growth in mid- to high-end phones and increased competition. Gross margin also decreased compared with a year ago reflecting a less favourable product mix, with particular impact in Europe, and increased price competition in general. Income before taxes for the quarter decreased compared to the second quarter of 2007 for the same reasons, as well as due to higher R&D investments as a percentage of sales.

Average selling price (ASP) for Sony Ericsson decreased both sequentially and year-on-year due to the impact of a greater proportion of lower priced phones in the product portfolio, as well as increased price competition in the market for mid- to high-end phones. Market share for the second quarter is estimated to be around 8%.

During the second quarter Sony Ericsson announced seven new phones, including its first 8 Megapixel Cyber-shot™ model, the C905. In addition the company started shipping 12 new phones, including a number of mid- to high-end Cyber-shot™ and Walkman™ models toward the end of the quarter.

“We are aligning our operations and resources worldwide to meet an increasingly competitive business environment and to help restore our capability for profitable growth. The measures we are taking are aimed at becoming a faster, more agile and more cost efficient organisation that can continue to create innovative products that excite consumers,” said Dick Komiyama, President, Sony Ericsson. “Our target is to achieve a reduction in operating expenses of Euro 300 million annually, with the full effect expected to appear within a year. We estimate that our restructuring charges will be of the same magnitude as our reduction in operating expenses, and we will incur such charges as our measures are implemented.”

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Sony Ericsson joined leading phone manufacturers, operators and vendors in announcing its support for the establishment of the Symbian Foundation, an initiative that will enable all members of the foundation to use the Symbian operating software platform, royalty-free. The Symbian Foundation is planned to be operational by the end of 2008.

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, with continued decline in industry ASP. The majority of this growth is expected to be in emerging markets where lower priced phones dominate.

Challenging market conditions are expected to prevail for Sony Ericsson for at least the rest of 2008, and in particular for the third quarter.

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

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

CONTACTS:

 

Investors / Analysts
Ericsson Investor Relations		Sony Investor Relations
Gary Pinkham (Stockholm) +46 8 719 0858		Shinji Tomita (London) +44 20 7444 9713
Susanne Andersson (Stockholm) + 46 8 719 4631		Tatsuyuki Sonoda (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

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		2008			2007			Change
Net sales		2,820			3,112			-9	%
Cost of sales		-2,168			-2,192			-1	%
Gross profit		653			921			-29	%
Gross margin %		23.1	%		29.6	%		-6	%
Research and development expenses		-344			-283			22	%
Selling and administrative expenses		-310			-321			-4	%
Operating expenses		-653			-604			8	%
Other operating income, net		-2			-2			1	%
Operating income		-2			315			-101	%
Operating margin %		-0.1	%		10.1	%		-10	%
Financial income		25			18			37	%
Financial expenses		-14			-6			-
Income after financial items		8			327			-98	%
Taxes		0			-97			-100	%
Minority interest		-3			-10			-72	%
Net income		6			220			-97	%
Number of units shipped (million)		24.4			24.9			-2	%
ASP (EUR)		116			125			-7	%

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Sony Ericsson

CONSOLIDATED INCOME STATEMENT - CUMULATIVE QUARTERS

 

		Jan-Jun
EUR million		2008			2007			Change
Net sales		5,522			6,037			-9	%
Cost of sales		-4,082			-4,231			-4	%
Gross profit		1,440			1,806			-20	%
Gross margin %		26.1	%		29.9	%		-4	%
Research and development expenses		-683			-544			26	%
Selling and administrative expenses		-580			-605			-4	%
Operating expenses		-1,263			-1,149			10	%
Other operating income, net		5			4			25	%
Operating income		182			662			-73	%
Operating margin %		3.3	%		11.0	%		-8	%
Financial income		49			36			35	%
Financial expenses		-29			-9			—
Income after financial items		201			689			-71	%
Taxes		-57			-197			-71	%
Minority interest		-6			-18			-68	%
Net income		139			474			-71	%
Number of units shipped (million)		46.7			46.7			0	%
ASP (EUR)		118			129			-9	%

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Sony Ericsson

CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS

 

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

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Sony Ericsson

CONSOLIDATED BALANCE SHEET

 

		Jun 30		Mar 31		Dec 31		Jun30
EUR million		2008		2008		2007		2007
ASSETS
Total fixed and financial assets		590		594		572		498
Current assets
Inventories		538		484		437		477
Accounts receivables		1,905		1,710		1,870		1,831
Other assets		511		369		345		845
Other short-term cash investments		966		1,106		1,431		1,071
Cash and bank		624		605		724		659
Total current assets		4,544		4,274		4,808		4,882
Total assets		5,134		4,868		5,380		5,380
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity		1,684		1,665		2,026		1,702
Minority interest		35		69		64		63
Total equity		1,719		1,734		2,090		1,764
Total long-term liabilities		25		25		26		21
Accounts payable		1,436		1,228		1,263		1,371
Other current liabilities		1,954		1,880		2,001		2,224
Total current liabilities		3,390		3,108		3,264		3,595
Total shareholders’ equity and liabilities		5,134		4,868		5,380		5,380
Net cash*		1,591		1,703		2,155		1,729

 

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

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS

 

		Apr-Jun
EUR million		2008		2007
OPERATIONS
Net income		6		220
Adjustments to reconcile net income to cash		40		30
		46		250
Changes in operating net assets		-142		16
Cash flow from operating activities		-96		266
INVESTMENTS
Investing activities		-29		-31
Cash flow from investing activities		-29		-31
FINANCING
Financing activities		-8		-548
Cash flow from financing activities		-8		-548
Net change in cash		-133		-312
Cash, beginning of period		1,711		2,045
Translation difference in Cash		13		-3
Cash, end of period		1,591		1,730

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS - CUMULATIVE QUARTERS

 

		Jan-Jun
EUR million		2008		2007
OPERATIONS
Net income		139		474
Adjustments to reconcile net income to cash		69		58
		208		532
Changes in operating net assets		-242		-437
Cash flow from operating activities		-34		95
INVESTMENTS
Investing activities		-50		-85
Cash flow from investing activities		-50		-85
FINANCING
Financing activities		-470		-548
Cash flow from financing activities		-470		-548
Net change in cash		-554		-538
Cash, beginning of period		2,155		2,273
Translation difference in Cash		-11		-5
Cash, end of period		1,591		1,730

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

 

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