irst Quarter Report
irst Quarter Report CARL-HENRIC SVANBERG President and CEO
Exciting industry development Evolution to mobile broadband accelerates Mobile office, music and mobile TV Consolidation Big gets bigger preparing for convergence and triple play Increased operator focus on scale and total cost of ownership Continued subscriber growth 3 billion already 2007 Continuosly more cost efficient solutions expands the market Dynamic environment with obvious opportunities
Extended leadership in Q1 Demonstrated capabilities in HSPA Rollouts over four continents 30 networks being launched Extending lead in softswitch 85 customers Evolution to converging networks with lower upfront investments Expanding position in services up 58% (excl. Marconi) 21,000 employees in 140 countries Global presence, technology leadership, operational excellence
Professional services highlights Professional services sales SEK 7.2 b. Up 48% year-over-year (excl. Marconi) Accelerated growth in managed services 30 managed operations with a total of 60 m. subscribers 50 hosting contracts accelerates time to market Recent wins - Vodafone Netherlands, 3 HK, SunCom, Acea Biggest telecom support organization Supporting 700 m. subscribers 24/7 Managed services drives total services business
Regional update, Q1 2006 - Ericsson sales (BSEK) and growth (%) year-over-year Operator consolidation Falling tariffs - will drive traffic and investments over time Growth driven by services and added Marconi sales Western Europe 11.2 b. 13% Central & Eastern Europe, Middle East & Africa North America Asia Pacific Latin America HSPA soon in all WCDMA networks
Regional update, Q1 2006 - Ericsson sales (BSEK) and growth (%) year-over-year Network rollouts continues - strong subscriber growth 3G accelerates - 25 operators in 14 countries Regional consolidation Western Europe 11.2 b. +13% Central & Eastern Europe, Middle East & Africa 10.5 b. +21% North America Asia Pacific Latin America Continued positive development
Regional update, Q1 2006 - Ericsson sales (BSEK) and growth (%) year-over-year Strong subscriber growth HSPA rollouts in Australia and Japan Strong sales growth despite Chinese 3G still on hold Western Europe 11.2 b. +13% Central & Eastern Europe, Middle East & Africa 10.5 b. +21% North America Asia Pacific 8.5 b. +44% Latin America Growth continues although local differences
Regional update, Q1 2006 - Ericsson sales (BSEK) and growth (%) year-over-year Increased operator focus on performance Brazil, 92 m. subscribers outpaced India last year Planning for 3G started first decisions this year Western Europe 11.2 b. +13% Central & Eastern Europe, Middle East & Africa 10.5 b. +21% North America Asia Pacific 8.5 b. +44% Latin America 3.7 b. +3% Market flattening after two exceptional years
Regional update, Q1 2006 - Ericsson sales (BSEK) and growth (%) year-over-year Cingular rollout on plan leading the industry Upcoming spectrum auctions critical for several operators Big getting bigger traditional operators building strength Western Europe 11.2 b. 13% Central & Eastern Europe, Middle East & Africa 10.5 b. +21% North America 5.3 b. +58% Asia Pacific 8.5 b. +44% Latin America 3.7 b. +3% Strong momentum for mobile broadband and triple play
Marconi update Marconi acquisition well received by customers Business development better than expected Sales of SEK 2.9 b. a solid start with early wins in Europe Good progress in integration Slightly postponed restructuring to safeguard commitments No significant savings effects in Q1 accellerates in Q3/Q4 Intangible assets amortized over ten years SEK 0.4 b. per quarter Tax deductible CEPS enhancing
Q1 financial highlights Sales SEK 39.2 (31.5) b. Up 24% year-over-year up 15% excl. Marconi sales Mobile networks up 14% Professional services up 60% Gross margin 43.3% (48.5%*) Down 0.9% sequentially - strong service growth and Marconi Positive effects when Marconi supply is moved to low cost sites Operating income SEK 6.6 (6.6) b. SEK 7.0 (6.6) b. before amortization of Marconi intangibles Operating margin 20% in old Ericsson *Q105 margin boosted by high software sales
Q1 financial highlights (cont.) Earnings per share SEK 0.29 (0.29) SEK 0.31 excl. amortization of Marconi intangibles Cash flow from operations SEK -16.1 (-6.5) b. Marconi acquisition SEK 17.6 b. Net cash of SEK 33.7 b. Dividend SEK 7.3 b. paid April 20
Sony Ericsson Q1 highlights Sales EUR 2.0 b. Sales up 55%, units up 41% Income before tax EUR 151 (70) million Increasing ASP, market and product investments paying off Exciting portfolio going forward Sony Ericsson Walkman, Cybershot and smart phones in focus Copyright Telefon AB LM Ericsson 2006. All rights reserved FIRST QUARTER REPORT 2006
Market outlook 2006 Global mobile systems market in USD expected to show moderate growth* Addressable market for professional services expected to show good growth* Well positioned to capture market opportunities *All estimates refer to market growth compared to previous year. This slide contains forward looking statements.
Investing for the future Mobile systems Expanding footprint with leading technologies Next generation converged networks Building leadership position Broadband and transmission networks Marconi paving the way Professional services Leveraging our leading position Global presence, technology leadership, operational excellence
irst Quarter Report Q & A