6-K 1 d6k.htm FORM 6-K Form 6-K

 

 

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

January 16, 2009

 

 

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 January 16, 2009, regarding “Sony Ericsson’s fourth quarter and full year 2008 report”.

 

 

 


LOGO

 

PRESS RELEASE    January 16, 2009

Sony Ericsson reports results for fourth quarter and full year 2008

Highlights:

 

   

Global economic slowdown leads to contracting consumer demand

 

   

Previously announced annual Euro 300 million cost savings on track

 

   

Initiated additional Euro 180 million annual cost savings

 

   

Joined the Open Handset Alliance and developing new phone using Android Open Source software

 

   

Successful rollout of Xperia™ X1, Cyber-shot™C905 phones and PlayNow™ plus music service

London, UK – The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the fourth quarter and full year ended December 31, 2008 is as follows:

 

     Q4 2008     Q3 2008     Q4 2007     FY 2008     FY 2007  

Number of units shipped (million)

   24.2     25.7     30.8     96.6     103.4  

Sales (Euro m.)

   2,914     2,808     3,771     11,244     12,916  

Gross margin (%)

   15 %   22 %   32 %   22 %   31 %

Operating income (Euro m.)

   -262     -33     489     -113     1,544  

Operating margin (%)

   -9 %   -1 %   13 %   -1 %   12 %

Restructuring charges (Euro m.)

   129     35     —       175     —    

Operating income excl. restructuring charges (Euro m.)

   -133     2     489     61     1,544  

Operating margin excl. restructuring charges (%)

   -5 %   0 %   13 %   1 %   12 %

Income before taxes (IBT) (Euro m.)

   -261     -23     501     -83     1,574  

IBT excl. restructuring charges (Euro m.)

   -133     12     501     92     1,574  

Net income (Euro m.)

   -187     -25     373     -73     1,114  

Average selling price (Euro)

   121     109     123     116     125  

Units shipped in the quarter were 24.2 million, a sequential decrease of 6% and a year-on-year decrease of 21%.

Sales for the quarter were Euro 2,914 million, an increase of 4% sequentially due to a positive impact of currency fluctuations, and a decrease of 23% compared to Q4 2007. The decline in sales year-on-year was driven by lower volumes, due to the global economic slowdown that resulted in contracting consumer demand and decreased availability of credit.

Gross margin became 15% due to negative impact from exchange rate fluctuations, restructuring charges and material write-offs.

Foreign exchange fluctuations had a positive impact on sales in total, but a large negative impact on costs of goods sold (ie. costs increased) sequentially, as well as year-on-year.

Income before taxes for the quarter was Euro -133 million, excluding restructuring charges of Euro 129 million, compared to the profit of Euro 501 million in Q4 2007. Despite a negative result in the quarter, Sony Ericsson maintained a healthy balance sheet with a strong, net cash position of Euro 1,072 million.

The average selling price (ASP) for Sony Ericsson in Q4 2008 was Euro 121, an increase sequentially but a decrease year-on-year. The sequential increase of ASP was due to a positive impact of foreign exchange rate fluctuations and to the sale of a higher proportion of high-end models. Estimated market share for Q4 2008 is maintained at around 8%.

“In economic terms, 2008 has been a tumultuous year with world markets experiencing a serious downturn. The mobile phone market has been greatly affected by this and as expected, the fourth quarter continued to be very challenging for Sony Ericsson. Our business alignment is progressing as planned, with the full effect of annual savings of around Euro 300 million expected by the second half of 2009. We foresee a continued deterioration in the market place in 2009, particularly in the first half,” said Dick Komiyama, President, Sony Ericsson.


The additional cost saving measures initiated by Sony Ericsson are aimed at reducing operating expenses by a further Euro 180 million annually, with the full effect expected at the end of 2009. Sony Ericsson currently estimates that the cost for the additional restructuring activities will be covered by the previously announced Euro 300 million restructuring charges.

In Q4 2008, the successful roll out of the Xperia™ X1 and Cyber-shot™C905; Sony Ericsson’s first eight mega pixel phone as well as the PlayNow™ plus music service positively impacted the business. In the same quarter, Sony Ericsson announced that it joined the Open Handset Alliance and is currently developing a new phone that uses the Android Open Source software.

Earlier in 2008, Sony Ericsson announced that it became a founding member of the Symbian Foundation; an initiative will create an open mobile software platform based on Symbian OS.

Sony Ericsson estimates the 2008 global handset market as being around 1,190 million units or around 6% growth from 2007, compared to the company’s previous forecast of around 10%. Sony Ericsson forecasts that the global handset market will contract in 2009 and that the industry ASP will continue to decline.

Cyber-shot™ is a trademark of the Sony Corporation.

The Liquid Identity logo, Xperia™ and the Xperia™ logo and PlayNow™plus 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:

Consolidated income statement

Consolidated income statement full year

Consolidated income statement isolated quarters

Consolidated balance sheet

Consolidated statement of cash flows

Consolidated statement of cash flows full year

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 around 97 million phones in 2008. 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

Gary Pinkham (Stockholm) +46 10 719 0858

Susanne Andersson (Stockholm) + 46 10 719 4631

  

Sony Investor Relations

Shinji Tomita (London) +44 20 7426 8696

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.


Sony Ericsson

CONSOLIDATED INCOME STATEMENT

 

     Oct-Dec  

EUR million

   2008     2007     Change  

Net sales

   2,914     3,771     -23 %

Cost of sales

   -2,476     -2,573     -4 %
              

Gross profit

   438     1,198     -63 %

Gross margin %

   15.0 %   31.8 %   -17 %

Research and development expenses

   -359     -349     3 %

Selling and administrative expenses

   -366     -375     -2 %
              

Operating expenses

   -725     -724     0 %

Other operating income, net

   24     15     62 %
              

Operating income

   -262     489     -154 %

Operating margin %

   -9.0 %   13.0 %   -22 %

Financial income

   28     19     47 %

Financial expenses

   -27     -7     287 %
              

Income after financial items

   -261     501     -152 %

Taxes

   81     -118     -169 %

Minority interest

   -7     -10     -28 %
              

Net income

   -187     373     -150 %

Number of units shipped (million)

   24.2     30.8     -21 %

ASP (EUR)

   121     123     -2 %

 

EUR Million

   Oct-Dec
2008

Restructuring charges

  

Cost of sales

   67

Research and development expenses

   35

Sales and administrative expenses

   24

Other operating income, net

   3
    

Total

   129


Sony Ericsson

CONSOLIDATED INCOME STATEMENT

 

     Jan-Dec  

EUR million

   2008     2007     Change  

Net sales

   11,244     12,916     -13 %

Cost of sales

   -8,750     -8,958     -2 %
              

Gross profit

   2,494     3,958     -37 %

Gross margin %

   22.2 %   30.6 %   -8 %

Research and development expenses

   -1,379     -1,173     18 %

Selling and administrative expenses

   -1,249     -1,260     -1 %
              

Operating expenses

   -2,628     -2,432     8 %

Other operating income, net

   21     18     19 %
              

Operating income

   -113     1,544     -107 %

Operating margin %

   -1.0 %   11.9 %   -13 %

Financial income

   101     62     64 %

Financial expenses

   -71     -32     122 %
              

Income after financial items

   -83     1,574     -105 %

Taxes

   31     -423     -107 %

Minority interest

   -21     -36     -42 %
              

Net income

   -73     1,114     -107 %

Number of units shipped (million)

   96.6     103.4     -7 %

ASP (EUR)

   116     125     -7 %

 

EUR Million

   Jan-Dec
2008

Restructuring charges

  

Cost of sales

   75

Research and development expenses

   62

Sales and administrative expenses

   29

Other operating income, net

   9
    

Total

   175


Sony Ericsson

CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS

 

     2008     2007  

EUR million

   Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Net sales

   2,914     2,808     2,820     2,702     3,771     3,108     3,112     2,925  

Cost of sales

   -2,476     -2,192     -2,168     -1,914     -2,573     -2,154     -2,192     -2,039  
                                                

Gross profit

   438     616     653     788     1,198     954     921     886  

Gross margin %

   15.0 %   21.9 %   23.1 %   29.2 %   31.8 %   30.7 %   29.6 %   30.3 %

Research and development expenses

   -359     -337     -344     -339     -349     -280     -283     -261  

Selling and administrative expenses

   -366     -303     -310     -270     -375     -280     -321     -284  
                                                

Operating expenses

   -725     -640     -653     -610     -724     -560     -604     -545  

Other operating income, net

   24     -8     -2     6     15     -1     -2     5  
                                                

Operating income

   -262     -33     -2     184     489     393     315     346  

Operating margin %

   -9.0 %   -1.2 %   -0.1 %   6.8 %   13.0 %   12.7 %   10.1 %   11.8 %

Financial income

   28     25     25     24     19     7     18     18  

Financial expenses

   -27     -15     -14     -15     -7     -16     -6     -2  
                                                

Income after financial items

   -261     -23     8     193     501     384     327     362  

Taxes

   81     6     0     -57     -118     -109     -97     -100  

Minority interest

   -7     -8     -3     -3     -10     -8     -10     -9  
                                                

Net income

   -187     -25     6     133     373     267     220     254  

Number of units shipped (million)

   24.2     25.7     24.4     22.3     30.8     25.9     24.9     21.8  

ASP (EUR)

   121     109     116     121     123     120     125     134  

 

EUR Million

   2008 *

Restructuring charges

   Q4    Q3    Q2

Cost of sales

   67    0    8

Research and development expenses

   35    26    2

Sales and administrative expenses

   24    3    1

Other operating income, net

   3    6    0
              

Total

   129    35    11

 

* Restructuring charges were not incurred in the first quarter of 2008.


Sony Ericsson

CONSOLIDATED BALANCE SHEET

 

EUR million

   Dec 31
2008
   Sep 30
2008
   Jun 30
2008
   Dec 31
2007

ASSETS

           

Total fixed and financial assets

   590    649    590    572

Current assets

           

Inventories

   531    717    538    437

Accounts receivables

   1,629    1,815    1,905    1,870

Other assets

   585    527    511    345

Other short-term cash investments

   707    918    966    1,431

Cash and bank

   418    555    624    724
                   

Total current assets

   3,870    4,532    4,544    4,808
                   

Total assets

   4,460    5,180    5,134    5,380
                   

SHAREHOLDERS’ EQUITY AND LIABILITIES

           

Shareholders’ equity

   1,217    1,429    1,684    2,026

Minority interest

   57    50    35    64
                   

Total equity

   1,274    1,480    1,719    2,090

Total long-term liabilities

   30    39    25    26

Accounts payable

   990    1,453    1,436    1,263

Other current liabilities

   2,166    2,208    1,954    2,001
                   

Total current liabilities

   3,156    3,661    3,390    3,264
                   

Total shareholders’ equity and liabilities

   4,460    5,180    5,134    5,380
                   

Net cash*

   1,072    1,374    1,591    2,155

 

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


Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS

 

     Oct-Dec

EUR million

   2008    2007

OPERATIONS

     

Net income

   -187    373

Adjustments to reconcile net income to cash

   37    17
         
   -150    390

Changes in operating net assets

   -168    44
         

Cash flow from operating activities

   -318    434

INVESTMENTS

     

Investing activities

   41    -27
         

Cash flow from investing activities

   41    -27

FINANCING

     

Financing activities

   -46    0
         

Cash flow from financing activities

   -46    0

Net change in cash

   -323    408

Cash, beginning of period

   1,473    1,758

Translation difference in Cash

   -25    -10
         

Cash, end of period

   1,125    2,155
         


Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS

 

     Jan-Dec

EUR million

   2008    2007

OPERATIONS

     

Net income

   -73    1,114

Adjustments to reconcile net income to cash

   146    107
         
   73    1,221

Changes in operating net assets

   -323    -305
         

Cash flow from operating activities

   -250    916

INVESTMENTS

     

Investing activities

   -64    -164
         

Cash flow from investing activities

   -64    -164

FINANCING

     

Financing activities

   -754    -849
         

Cash flow from financing activities

   -754    -849

Net change in cash

   -1,068    -97

Cash, beginning of period

   2,155    2,273

Translation difference in Cash

   37    -21
         

Cash, end of period

   1,125    2,155
         


Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

 

     2008    2007

EUR million

   Oct-Dec    Jul-Sep    Apr-Jun    Jan-Mar    Oct-Dec    Jul-Sep    Apr-Jun    Jan-Mar

OPERATIONS

                       

Net income

   -187    -25    6    133    373    267    220    254

Adjustments to reconcile net income to cash

   37    39    40    31    17    32    30    28
                                       
   -150    15    46    164    390    299    250    282

Changes in operating net assets

   -168    88    -142    -101    44    88    16    -454
                                       

Cash flow from operating activities

   -318    102    -96    64    434    387    266    -172

INVESTMENTS

                       

Investing activities

   41    -55    -29    -22    -27    -53    -31    -53
                                       

Cash flow from investing activities

   41    -55    -29    -22    -27    -53    -31    -53

FINANCING

                       

Financing activities

   -46    -238    -8    -462    0    -300    -548    -1
                                       

Cash flow from financing activities

   -46    -238    -8    -462    0    -300    -548    -1

Net change in cash

   -323    -191    -133    -421    408    34    -312    -226

Cash, beginning of period

   1,473    1,591    1,711    2,155    1,758    1,730    2,045    2,273

Translation difference in Cash

   -25    74    13    -24    -10    -6    -3    -2
                                       

Cash, end of period

   1,125    1,473    1,591    1,711    2,155    1,758    1,730    2,045
                                       


Sony Ericsson

NET SALES BY MARKET AREA BY QUARTER

EUR million

 

     2008     2007  

Isolated quarters

   Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Europe, Middle East & Africa *

   1,642     1,427     1,386     1,494     2,251     1,715     1,729     1,598  

Americas

   636     703     740     486     636     573     499     365  

Asia

   636     678     694     722     884     820     885     961  
                                                

Total

   2,914     2,808     2,820     2,702     3,771     3,108     3,112     2,925  
                                                

 

* of which Western Europe

   1,117     947     900     979     1,569     1,103     1,102     1,078  
     2008     2007  

Sequential change (%)

   Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Europe, Middle East & Africa *

   15 %   3 %   -7 %   -34 %   31 %   -1 %   8 %   -26 %

Americas

   -10 %   -5 %   52 %   -24 %   11 %   15 %   37 %   -34 %

Asia

   -6 %   -2 %   -4 %   -18 %   8 %   -7 %   -8 %   -11 %
                                                

Total

   4 %   0 %   4 %   -28 %   21 %   0 %   6 %   -23 %
                                                

 

* of which Western Europe

   18 %   5 %   -8 %   -38 %   42 %   0 %   2 %   -27 %
     2008     2007  

Year over year change (%)

   Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Europe, Middle East & Africa *

   -27 %   -17 %   -20 %   -7 %   5 %   7 %   59 %   55 %

Americas

   0 %   23 %   48 %   33 %   15 %   37 %   52 %   46 %

Asia

   -28 %   -17 %   -21 %   -25 %   -18 %   -8 %   4 %   35 %
                                                

Total

   -23 %   -10 %   -9 %   -8 %   0 %   7 %   37 %   47 %
                                                

 

* of which Western Europe

   -29 %   -14 %   -18 %   -9 %   6 %   -1 %   47 %   60 %
     2008     2007  

Year to date

   0812     0809     0806     0803     0712     0709     0706     0703  

Europe, Middle East & Africa *

   5,966     4,324     2,879     1,494     7,293     5,042     3,328     1,598  

Americas

   2,566     1,930     1,226     486     2,072     1,436     864     365  

Asia

   2,712     2,076     1,416     722     3,550     2,666     1,846     961  
                                                

Total

   11,244     8,330     5,522     2,702     12,916     9,145     6,037     2,925  
                                                

 

* of which Western Europe

   3,943     2,826     1,879     979     4,852     3,283     2,179     1,078  
     2008     2007  

YTD year over year change (%)

   0812     0809     0806     0803     0712     0709     0706     0703  

Europe, Middle East & Africa *

   -18 %   -14 %   -13 %   -7 %   24 %   36 %   57 %   55 %

Americas

   24 %   34 %   42 %   33 %   34 %   44 %   49 %   46 %

Asia

   -24 %   -22 %   -23 %   -25 %   0 %   8 %   18 %   35 %
                                                

Total

   -13 %   -9 %   -9 %   -8 %   18 %   27 %   42 %   47 %
                                                

 

* of which Western Europe

   -19 %   -14 %   -14 %   -9 %   21 %   29 %   53 %   60 %


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.

 

TELEFONAKTIEBOLAGET LM ERICSSON (PUBL)
By:  

/s/ CARL OLOF BLOMQVIST

  Carl Olof Blomqvist
 

Senior Vice President and

General councel

By:  

/s/ HENRY STÉNSON

  Henry Sténson
 

Senior Vice President

Corporate Communications

Date: January 16, 2009