Ericsson first quarter report 2006, CEO slides › 49af70 › assets › local › ...Extended...

2006-04-21© Copyright Telefon AB LM Ericsson 2006. All rights reserved FIRST QUARTER REPORT 2006

irstQuarter Report


irstQuarter Report

CARL-HENRIC SVANBERGPresident 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 consolidationFalling tariffs - will drive traffic and investments over time Growth driven by services and added Marconi sales

HSPA soon in all WCDMA networks

North America Asia Pacific

Central & Eastern Europe,Middle East & Africa11.2 b. 13%

Western Europe

Latin America


Regional update, Q1 2006 - Ericsson sales (BSEK) and growth (%) year-over-year

Network rollouts continues - strong subscriber growth3G accelerates - 25 operators in 14 countriesRegional consolidation

Continued positive development

North America Asia Pacific

10.5 b. +21%11.2 b. +13%

Western Europe

Latin America

Central & Eastern Europe,Middle East & Africa



Strong subscriber growthHSPA rollouts in Australia and JapanStrong sales growth despite Chinese 3G still on hold

Growth continues although local differencesLatin America

North America Asia Pacific8.5 b. +44%

11.2 b. +13%Western Europe

10.5 b. +21%




Increased operator focus on performanceBrazil, 92 m. subscribers – outpaced India last yearPlanning for 3G started – first decisions this year

Market flattening after two exceptional years

North America

Latin America 3.7 b. +3%

Asia Pacific8.5 b. +44%

11.2 b. +13%Western Europe

10.5 b. +21%




Cingular rollout on plan – leading the industryUpcoming spectrum auctions critical for several operatorsBig getting bigger – traditional operators building strength

Strong momentum for mobile broadband and triple play

5.3 b. +58% North America

Latin America 3.7 b. +3%

Asia Pacific8.5 b. +44%

11.2 b. 13%Western Europe

10.5 b. +21%



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


Market outlook 2006

*All estimates refer to market growth compared to previous year. This slide contains forward looking statements.

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


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


irstQuarter Report

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Ericsson first quarter report 2006, CEO slides › 49af70 › assets › local › ...Extended...

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