RNS Number:8820X
Ericsson(L.M.)(Telefonaktiebolaget)
26 January 2001
Ericsson extends leadership in 2G and 3G - growing faster than the market
* In 2000, sales up 27% and orders up 31% (for comparable units
29% and 33%)
* Increasing investment in 3G to reinforce success
* Operating margin in line with outlook
* Mobile phones: Complete transfer of production. Additional
restructuring charges in 2000 of SEK 8b. raising cost savings to SEK 15b.
per year by 2002
* A capital gain of SEK 15.4b. from sale of Juniper Networks shares
* Outlook 2001: Sales growth 15-20% and operating margin between
6 and 8 %, with increased 3G investments.
(SEK b.) Fourth Twelve months
Quarter
2000 1999 Change % 2000 1999 Change %
Orders 79.5 66.0 20% 292.3 223.8 31%
Sales 82.1 73.8 11% 273.6 215.4 27%
Operating income 5.6 8.7 -33% 31.2 17.6 77%
Adjusted Operating -1.5 8.7 16.7 17.9 -7%
income 1)
Adjusted Operating -1.8% 11.8% 6.1% 8.3%
margin %
Income before tax 4.6 8.5 -46% 28.7 16.4 75%
(IBT)
EPS, fully diluted 0.28 0.78 -64% 2.65 1.54 72%
(SEK)
EPS US GAAP, fully 1.15 0.96 20% 3.44 1.92 79%
diluted (SEK)
Cash flow before 11.6 9.5 6.4 -2.4
financing activities
1) Adjusted for
Capital gain Juniper 15.4 15.4
Non-operational -0.2 7.0 -0.3
gains/losses &
pension refund
Additional -8.0 -8.0
restructuring in
phones
Results in line with guidance
With an adjusted operating margin of 6.1% for 2000 and a positive cash
flow in the fourth quarter, Ericsson delivered a financial performance in
line with guidance. Sales and orders growth were driven once again by
continued strong performance in mobile systems.
In the fourth quarter, Ericsson achieved an operating income of SEK 5.6b.
Adjusted operating income was SEK -1.5b., excluding capital gain from
Juniper shares, SEK 15.4b., non-operational capital losses of SEK -0.2b.,
and additional restructuring charges of SEK 8b. for the full outsourcing
of the mobile phone production. The adjusted operating income includes
earlier announced restructuring costs of SEK 4.7b.
CEO COMMENT
"We have generated a solid growth, and in mobile systems we have once
again managed to grow even faster than the market, with good
profitability", said Kurt Hellstrom, President and CEO of Ericsson.
"We are now the world leader in both 2G and 3G mobile systems. We have
captured well over 50% of the GPRS and 3G orders so far. We are in a prime
position to increase our market share in the shift to 3G; one of the
largest technology shifts ever. We have achieved this with our customer
base, our technology leadership, and our ability and commitment to deliver
these systems in large volumes. We are now aggressively investing even
more in 3G to secure our commitments.
"The results in our mobile phones business, while in line with
expectations, remain unsatisfactory. As announced, the losses are caused
by delivery failure from key suppliers and an inadequate product mix in
the entry-level market. The delivery failures have lead to loss of large
sales volumes and serious under-utilization of production capacity, which
has forced us into costly restructuring measures."
"Our back-to-profit program, launched in the middle of last year, is
progressing as planned, and we are on track to reach profitability by the
second half of this year. In light of current market dynamics, we have
taken a fundamental look at how we run the consumer business, and we have
decided to completely outsource supply and production of mobile phones."
"We signed a strategic partnership with Flextronics that allows us to
rapidly achieve better economies of scale and increased flexibility. These
extra measures cause further provisions that we see as an investment that
will give us a very quick payback. Overall, we will reach annual cost
savings of SEK 15b. a year from 2002. As this also creates a sound basis
for long-term profitability, it also confirms our commitment to remain a
top player in mobile phones."
Orders in Mobile Systems up more than 60% in fourth quarter
By the end of the fourth quarter, Ericsson had won 22 of 33 publicly
announced WCDMA agreements and a majority of the GPRS contracts. Operators
in North America and Latin America chose the GSM/GPRS track towards 3G and
Mobile Internet. We are also benefiting as the world's number one in GSM
and 3G. As operators intensify investments in GSM and 3G, we grew our
mobile systems order intake in the fourth quarter by more than 60%. We
have increased R&D, supply and implementation capacity for 3G during the
fourth quarter; a trend that will continue during 2001.
ENGINE wins 35% market share
In the fourth quarter 2000, Ericsson continued to gain a strong foothold
in the market for converting telecom networks from circuit switched
narrow-band to packet-switched broadband technologies supporting high-
speed data and Internet. We won a 35% market share in fierce competition
with traditional datacom suppliers. The market is driven by leading
telecom operators, and ENGINE's success builds on our strong relationships
with these operators, as well as our long standing experience and research
in ATM and IP.
Mobile phones maintain over 10% market share
During the quarter, Ericsson shipped 11.8 million phones. Overall, we sold
43.3 million phones, an increase of 38% and a share of over 10% in an
estimated world market of around 405 - 415 million in 2000. The back-to-
profit program is on target to lead the division to profits in the second
half of 2001. According to our plan, we are transferring the mobile phone
production from our factories in Kumla/Sweden and Lynchburg/Virginia to
low-cost manufacturing units. We have phased out a number of products to
concentrate our product portfolio. Our partnership with Arima/Taiwan to
develop and manufacture entry-level phones for GSM is on schedule, and
this week, we signed another agreement with the Taiwanese manufacturer GVC
who will handle development and production of phones according to our
specifications. On top of this, we are now entering a strategic
partnership with Flextronics for complete outsourcing of mobile phones
production. Ericsson will focus on technology, design, branding, marketing
and sales of phones. By the end of this year, the division Consumer
Products will employ 7,000 people, compared to 18,000 last year.
Our market view
The strong growth in mobile communications continues. It is driven by the
growing number of subscribers and the large operators' transition to
multi-service broadband networks. In 2000, the number of mobile
subscribers grew by almost 50% to between 700 and 715 million. For 2001,
we expect the mobile phone market to reach between 500 and 540 million
units, and the number of mobile subscribers to reach 920 - 950 million.
The growing demand for Mobile Internet is demonstrated by the success of
SMS and WAP/i-mode. Over 13 billion SMS messages are sent every month, andthe
number of WAP phones increased from 3 to 26 million from August to
December 2000. This year, GPRS - or 2.5G - will be in operation, and
Ericsson will begin delivery of 3G systems. We strongly believe in Mobile
Internet, and remain committed to drive the market and deliver end-to-end
solutions.
Outlook
A more uncertain economic environment and a more cautious capital market
contribute to more uncertainty also in our industry. However, we remain
optimistic about our business.
We have won most of the contracts for the next generation networks.
Therefore we are increasing investments to secure our fast start in 3G.
For the first quarter 2001 we see continued strong growth for systems and
lower sales for phones. Overall we expect to increase sales by around 15%
for comparable units. Income before tax is expected to be around zero,
affected by operating losses in phones and increased 3G investments. Later
in the year we will begin to benefit from the restructuring of our phones
business.
For the full year 2001, we expect sales to grow between 15 and 20% and an
operating margin in the range of 6-8%.
FINANCIAL REVIEW
* All numbers in SEK if not stated otherwise
FOURTH QUARTER
ORDERS, SALES AND INCOME
Orders booked in the fourth quarter increased by 20%, with strong systems
orders offsetting lower orders for mobile phones and Other operations.
Adjusting for an exceptionally large order of SEK 4.9b. in Defense Systems
in the fourth quarter of 1999, the increase was 30%. ENGINE and GPRS order
bookings developed favorably. We increased sales by 11%.
Gross margins in our network operators business were stable, but overall
gross margin declined due to lower margins for mobile phones, as price
pressure continued, as expected. We shipped 11.8 million phones in the
quarter to reach a total of 43.3 million for the year, confirming our
position as the world's third largest vendor.
As presented in October, we have begun restructuring of the handset
business in our "Back-to-Profits" program. As forecasted, we had 4.7b.
of restructuring costs, including inventory write-downs for obsolescence.
The new decision to outsource all our manufacturing of mobile phones
resulted in an additional restructuring provision of 8b. in the fourth
quarter, which includes the 2b. previously identified for the back-to-
profits-program. Of the total restructuring amount, 12.7b., around 50%
relate to inventory and supply, and around 20% relate to excess equipment
when outsourcing, and around 30% represent personnel redundancy, and
unabsorbed fixed costs in our production units.
Operating expenses increased in the quarter, following increased R&D
efforts for 3G, as indicated above, and expenses related to restructuring
in Consumer Products. Operating expenses were 35% of sales in the quarter,
above our target of 30%.
Operational capital gains in the quarter other than Juniper Networks were
0.1b., somewhat lower than our outlook of 0.4b.
Income effects of changed currency exchange rates compared to the rates
during last year were approximately +0.4b. Operating income in the quarter
was 5.6b. Adjusted for capital gain of Juniper shares, non-operational
items and additional restructuring provision in phones, the operating
income was -1.5b.
Income before tax was 4.6b. Minority interests in income were higher than
earlier in the year, due to good fourth quarter results in certain
companies.
BALANCE SHEET AND CASH FLOW
We reduced inventory by 5.1b. in the quarter, of which 5.9b. in phones.
Inventory for systems increased by 0.7b. Accounts receivable increased by
9.1b., driven by the larger sales particularly in December. We managed to
reduce customer financing receivables by 2.9b. Investments in tangible
assets were 3.8b.
Cash flow before financing activities in the quarter was 11.6b., which
includes the favorable effect of sales of shares in Juniper Networks.
FULL YEAR 2000
Orders booked increased by 31% and sales by 27% (33% and 29%, for
comparable units), slightly above our outlook.
Orders and sales in our Network Operator segment developed well during the
year with orders up 40% and sales up 29%. Strong demand for 2G
infrastructure, GPRS and ENGINE were main drivers. The ENGINE solution for
migration of circuit-switched networks to next-generation packet-switched
technology is to a large extent utilizing earlier development in the
broadband area, such as broadband ISDN and optical transmission systems.
In our mobile phones business, sales and gross margins were severely
impacted by delivery problems from a key supplier, leading to delays and
reductions in sales, lower prices and large inventory write-offs. In
addition, we also decided to implement an aggressive restructuring program
for the phone operations and incurred additional costs.
Operating expenses were 33% of sales, above our target of 30%, due to
increased R&D investments and beginning ramp-up of capacity for 3G.
Overall, we achieved an adjusted operating margin of 6.1%, excluding a
capital gain of 15.4b from sale of Juniper shares, additional
restructuring provision in phones 8b. and non-operational items of 7.0b.
This is in line with our guidance.
Income effects of changed currency exchange rates compared to the rates
during last year were around +1.3b. For mobile phones, however, effects
were negative around -3.4b. due to unfavorable exposure from purchases in
Japanese Yen and US dollars combined with a large share of revenues in EUR.
Income before tax was 28.7 (16.4)b., up 75%. The tax rate year to date was
as low as 27%, since a portion of the capital gains was non-taxable.
Earnings per share, fully diluted were SEK 0:28 (0:78) in the quarter and
2:65 (1:54) year to date. The dilutive effect of this year's employee
stock option programs was around 0.2%. Earnings per share according to US
GAAP were SEK 3:44 (1:92).
Inventory turnover for the year reached 5.2 (4.8), affected by inventory
write-downs. Our long-term target is a level of more than 5.0. Receivables
turnover for the year was 3.9 (3.7) turns, slightly below target of 4.0.
Customer financing is granted very selectively and preferably as bridge-
financing until a permanent solution is found by our customers. During the
year, we managed to reduce on-balance sheet risks by 20%, while off-
balance sheet exposure increased only slightly.
Investments in tangible assets were 12.3b., of which 5.1b. in Sweden.
The equity ratio at year-end was 37.7 (35.2)%. We did not reach our target
of 40% and we will continue our efforts to improve capital efficiency, in
particular regarding inventory and receivables.
Cash flow before financing activities year to date was 6.4b, with the
favorable effect of capital gains offsetting increases in inventory and
receivables.
At year-end 2000 Ericsson had 105,129 employees world-wide, a net increase
of 1,839 during the year, mainly a result of increased R&D efforts for 3G.
DIVIDEND PROPOSAL
The Board of Directors will propose to the Annual General Meeting an
unchanged dividend of SEK 0:50 per share.
ANNUAL REPORT
The Annual Report will be distributed to shareholders and be available at
our head office at Telefonplan, Stockholm, as of March 9, 2001.
ANNUAL GENERAL MEETING OF SHAREHOLDERS
The Annual General Meeting of shareholders will be held on Wednesday March
28, 2001 in Stockholm Globe Arena.
Appendices:
* Segment review
* Market review
* Orders, sales and margins by segment by quarter
* Employees
* Restated segment data for new segment structure
Stockholm
Kurt Hellstrom
President and CEO
As earlier communicated, the Board of Directors appointed Kurt Hellstrom
also Chief Executive Officer effective as of January 1, 2001.
Uncertainties in the Future.
"Safe Harbor" Statement under the U.S. Private Securities Litigation
Reform Act of 1995:
Some statements in this interim report are forward looking and actual
results may differ materially from those stated. In addition to the
factors discussed, among other factors that may affect results are product
demand, the effect of economic conditions, exchange-rate and interest-rate
movements, the impact of competing products and their pricing, product
development, commercialization and technological difficulties, political
risks in the countries in which the Company has operations or sales,
supply constraints, and the result of customer financing efforts.
Date for next report: April 20, 2001
FOR FURTHER INFORMATION PLEASE CONTACT
Roland Klein, Senior Vice President, Corporate Communications
Phone: +46 8 719 2128, +44 7776 162997; E-mail:roland.klein@clo.ericsson.se
Media:
Pia Gideon, Vice President, External Relations
Phone: +46 8 719 2864, +46 70 519 2864; E-mail: pia.gideon@lme.ericsson.se
Investor relations:
Gary Pinkham, Vice President, Investor Relations
Phone: +1 212 685 4030; E-mail: gary.pinkham@ericsson.com
Lars Jacobsson, Vice President, Financial Reporting and Analysis
Phone: +46 8 719 9489, +46 70 519 9489; E-mail: lars.jacobsson@lme.ericsson.se
SEGMENT REVIEW
Segment results fourth quarter 2000
Segment (SEK b. Orders Order Sales Sales Adjusted Adjusted
growth growth Operating Operating margin
income
Network 60.2 47% 61.4 21% 9.4 15% (17%)
Operators
Consumer 14.9 -5% 13.9 -17% -10.3 -74% (6%)
Products
Enterprise 4.7 1% 5.8 8% 0.3 5% (8%)
Solutions
Other 3.8 -58% 4.8 -12% -0.2 -5% (0%)
operations
Unallocated -0.7
Inter-segment -4.2 -3.7
sales
TOTAL 79.5 20% 82.1 11% -1.5 -2% (12%)
Adjustments:
Capital gain 15.4
Juniper
Non- -0.2
operational
items
Additional -8.0
restructuring
Operating 5.6
income
Network Operators
Sales increased by 21% and now generate 75% of total sales. GSM systems
showed the strongest sales growth and very strong order bookings. Wireline
systems showed a good quarter based on ENGINE demand. Latin America
achieved particularly strong sales, whereas Western Europe had a slow
growth rate. Increased R&D spending, along with a changed sales mix of
products and markets, caused the operating margin to drop from 17 to 15%.
Consumer Products
In the quarter we sold 11.8 million phones. As indicated in our outlook,
pressure on prices resulted in reduced margins The Back-to-Profits program
is on its way to return the business into profits in the second half 2001.
Enterprise Solutions
Enterprise solutions are in the process of changing the distribution
channel strategy to work with third party channels. As these efforts
slowed down the business, sales growth and operating income were modest.
Other operations and Unallocated
Due to a large Defense Systems order in the fourth quarter last year, this
year's order bookings appear low. This year, Energy Systems were divested
from April 1,which has reduced sales this year. Our Cables business has
done very well with strong demand for fiber optic cables.
Microelectronics' sales has been somewhat hurt by the lower volumes for
mobile phones. Operating income is negative due to unfavorable development
in our joint venture with Hewlett-Packard. On a comparable basis, orders
decreased by 10% and sales increased by 5%. Unallocated costs were
slightly lower than in the fourth quarter last year.
SEGMENT REPORT CONTINUED
Segment results full year 2000
Segment (SEK Orders Order Sales Sales Adjusted Adjusted Employees
b.) growth growth Operating Operating
income margin
Network 212.4 40% 194.1 29% 33.1 17%(13%) 70,317
Operators
Consumer 57.0 20% 56.3 21% -16.2 -29% (1%) 16,840
Products
Enterprise 17.8 -1% 17.5 1% 0 0% (0%) 8,324
Solutions
Other 18.6 -16% 19.0 14% 1.7 9% (2%) 8,520
operations
Unallocated -1.9 1,128
Inter-segment -13.5 -13.4
sales
TOTAL 292.3 31% 273.6 27% 16.7 6% (8%) 105,128
Adjustments:
Capital gain 15.4
Juniper
Non- 7.0
operational
items
Additional -8.0
restructuring
Operating 31.2
income
Network Operators
With order growth and sales stronger than the market, we improved our
operating margin to 17 (13)%. Orders and sales were strong for all mobile
standards, and good orders bookings were achieved for our ENGINE solution.
Also Mini-link transmission equipment had a strong increase from last
year. The operating income reflects an increased investment level in R&D
and other preparations for rapid roll-out of 3G.
Consumer Products
We increased unit sales by 38% to 43.3 million units. Revenues grew 21%,
to 56.3b., a result of lost sales due to component supply, unfavorable
product mix and an over-supply situation in the end of the year, with
strong price erosion. The full year loss at -16.2b. is in line with
guidance after nine months and includes 4.7b. of restructuring charges.
Enterprise Solutions
The business consulting business grew substantially during the year and
was increasingly focused on Internet applications. The traditional
business with enterprise communications solutions of PABXs and data
networks was reorganizing its distribution channels during the year, which
slowed down the business development. Orders and sales were flat and the
operating margin was slightly down.
Other Operations and unallocated costs
During the year we have divested our Energy systems business and real
estate properties. These effects are reported among non-operational
capital gains. Among remaining business operations, Cables, Defense
systems and Microelectronics all had very strong sales increases. Orders
increased very well too, except for Defense systems, where a large ERIEYE
order last year makes this year's bookings lower. Unallocated costs
decreased more than 20% compared to last year. A pension refund of 1.1b.
is included in non-operational items.
New segment reporting for 2001
For enhanced comparability with peer companies in our industry as well as
competitive reasons, we will in 2001 report orders, sales and operating
income according to our primary areas of business - Systems, Phones and
Other operations. Within the Systems business, orders and sales for mobile
systems and multi-service networks will be separately disclosed, although
there is a high degree of integration within systems for R&D, customers,
implementation and support services. Attached is a restated segment report
for year 2000 by quarter in the new format.
MARKET REVIEW
External Sales by Market Area, fourth quarter 2000
Market Network Consumer Enterprise Other Total % of Increase
Area Operators Products Solutions Operations Total
Western 19.6 5.4 2.9 2.2 30.1 37% 2%
Europe
CEEMA *) 10.1 1.1 0.4 0.2 11.9 14% 16%
North 4.6 2.3 0.1 0.4 7.5 9% -1%
America
Latin 12.2 2.4 0.4 0.2 15.2 19% 34%
America
Asia 14.0 2.5 0.4 0.5 17.5 21% 15%
Pacific
Total**) 60.5 13.8 4.3 3.4 82.1 100% 11%
External Sales by Market Area, full year 2000
Market Network Consumer Enterprise Other Total % of Increase
Area Operators Products Solutions Operations Total
Western 60.7 23.3 8.4 7.8 100.2 36% 17%
Europe
CEEMA *) 29.6 6.2 0.9 1.0 37.7 14% 27%
North 23.4 9.9 0.4 1.5 35.2 13% 40%
America
Latin 35.9 6.1 1.3 0.9 44.1 16% 46%
America
Asia 43.4 10.5 1.2 1.2 56.3 21% 25%
Pacific
Total **) 193.0 56.0 12.1 12.4 273.6 100% 27%
*) Central and Eastern Europe, Middle East and Africa
**) Excluding inter-segment sales
Sales increases slowed down the fourth quarter, in particular in Western
Europe, North America and Japan.
In Europe, operators have begun to cut subsidies of mobile phones,
reducing the growth of new subscribers and slowing down replacement. As
the penetration is now around 70% in many countries, the main objective
for operators is to keep the current customer base. A number of firm
contracts for 3G were signed in the fourth quarter, underlining our
leading position. ENGINE continues to dominate the "Circuit-to-Packet"
market. A major break-through order for IP backbone network including
Juniper routers was won with Telia International, evidence of the strong
partnership with Juniper, which has now lead to a joint venture agreement.
Our joint venture with Microsoft reported the first contract for its first
product, Outlook via Mobile.
Our North American operations increased sales for the year strongly.
Operators have decided to go for GSM for their 2.5G networks as a way into
3G, which is favorable for us as the market leader in GSM and GPRS. GPRS
trials are ongoing. CDMA sales started to pick up momentum and a strategic
order for cable modems was won. As part of the back-to-profits program in
our Consumer Business, around 2000 employees will be transferred to SCI in
early 2001, following the outsourcing of manufacturing operations in
Lynchburg, USA. In the end of the year, Ericsson acquired Microwave Power
Devices, a leading developer of multi-carrier power amplifier technology,
an important competence for development of 3G systems.
In Latin America, sales were very strong in Mexico and Argentina in
particular, plus Brazil. Also in Latin America, operators will go the
GSM/GPRS-way to 3G.
In Asia Pacific, the two major markets China and Japan showed slightly
different developments. China had moderate sales increases, but strong
orders booked. Sales in Japan were very strong but orders increased
slower. It seems as if the market in China is beginning to pick up
momentum after a comparatively low investment level in 2000.
Top 10 Markets in Orders and Sales, Year 2000
Market Share of Share of Total
Total Orders Sales
USA 12% 12%
China 8% 7%
United Kingdom 7% 8%
Mexico 6% 6%
Italy 6% 6%
Brazil 6% 6%
Spain 5% 5%
Japan 5% 5%
Turkey 4% 4%
Sweden 3% 3%
CONSOLIDATED INCOME STATEMENT
Oct-Dec Oct-Dec Jan-Dec Jan-Dec
SEK 2000 1999 2000 1999
millions
Net sales 82,109 73,755 273,569 215,403
Cost of sales -63,113 -42,385 -180,392 -125,881
Gross margin 18,996 31,370 93,177 89,522
Gross margin as percentage 23.1% 42.5% 34.1% 41.6%
of net sales
Research and development and
other technical expenses -13,458 -9,873 -41,921 -33,123
Selling expenses -11,340 -10,387 -34,706 -30,005
Administrative expenses -4,254 -3,487 -13,311 -11,278
Operating expenses -29,052 -23,747 -89,938 -74,406
Operating expenses as
percentage of net sales 35.4% 32.2% 32.9% 34.5%
Other operating revenues 15,586 1,066 27,652 2,224
Share in earnings of
associated companies 117 -2 274 250
Operating income 5,647 8,687 31,165 17,590
Operating margin as
percentage of net sales 6.9% 11.8% 11.4% 8.2%
Financial income 720 562 2,929 2,273
Financial expenses -1,314 -457 -4,449 -2,971
Income after financial items 5,053 8,792 29,645 16,892
Minority interest in -460 -313 -953 -506
income before taxes
Income before taxes *) 4,593 8,479 28,692 16,386
Taxes -2,343 -2,156 -7,674 -4,256
Net income *) 2,250 6,323 21,018 12,130
*) Of which capital
gains/losses, net of minority 15,221 728 25,229 1,843
Operational gains/losses 15,452 769 19,296 2,171
Non-operational gains/losses -231 -41 5,933 -328
Operating margin adjustments for items
affecting comparability:
Capital gain Juniper Networks 15,383 15,383
Non-operational gains/losses -231 -41 5,933 -328
Pension refund 1,100
Additional restructuring -8,000 -8,000
provision in Consumer Products
Total adjustments 7,152 -41 14,416 -328
Adjusted operating margin -1,505 8,728 16,749 17,918
Adjusted operating margin
as percentage of net sales -1.8% 11.8% 6.1% 8.3%
The average rate for conversion from US dollars to SEK was 9.1716 for
income statement items
CONSOLIDATED BALANCE SHEET
Dec 31 Dec 31
SEK millions 2000 1999
Fixed assets
Intangible assets 12,833 10,548
Tangible assets 22,378 24,719
Financial assets
Equity in associated companies 2,790 2,712
Other investments 2,484 1,751
Long-term customer financing 6,364 6,657
Other long-term receivables 3,657 4,972
Total fixed assets 50,506 51,359
Current assets
Inventories 43,933 25,701
Receivables
Accounts receivable - trade and short-
term customer financing 76,240 65,333
Other receivables 44,029 31,227
Short-term cash investments,
cash and bank 35,606 29,008
Total current assets 199,808 151,269
Total assets 250,314 202,628
Stockholders' equity 91,686 69,176
Minority interest in
consolidated subsidiaries 2,764 2,182
Convertible debentures 4,347 5,453
Interest bearing provisions
and liabilities 42,216 39,567
Non-interest bearing
provisions and liabilities 109,301 86,250
Total stockholders' equity,
provisions and liabilities 250,314 202,628
The closing rate for conversion from US dollars to SEK
was 9.4990 for balance sheet items.
CONSOLIDATED STATEMENT OF CASH FLOWS
Jan-Dec Jan-Dec
SEK millions 2000 1999
Cash flow from operating
activities -10,848 12,925
Investments 17,244 -15,364
Cash flow before financing
activities 6,396 -2,439
Financing -236 13,550
Effect of exchange rate changes on
cash 438 -336
Net change in cash 6,598 10,775
TREND OF OPERATIONS IN BRIEF
Jan-Dec Jan-Dec Changes
SEK 2000 1999 in %
millions
Net sales 273,569 215,403 27%
Adjusted operating margin as
percentage of net sales 6.1% 8.3%
Income before taxes 28,692 16,386 100%
Net income 21,018 12,130 106%
Average number of
shares (millions) 7,869 7,817
Average number of shares, fully
diluted (millions) 8,004 7,987
Earnings per share (SEK) 2.70 1.58 71%
Earnings per share,
fully diluted (SEK) 2.65 1.54 72%
Earnings per share, fully diluted,
in accordance with U.S. GAAP (SEK) 3.44 1.92 79%
Equity ratio 37.7% 35.2%
Additions to tangible
fixed assets 12,294 9,085 35%
Total depreciation on tangible 9,957 6,532 52%
and intangible assets
- Of which
goodwill 761 684 11%
Number of employees, 105,129 103,290 2%
end of period
Orders booked 292,344 223,828 31%
Capital turnover ratio 2.1 2.1
Calculation of
earnings per share:
Net income 21,018 12,130
Interest on convertible
debentures, net after tax 207 185
Adjusted net income 21,225 12,315
Average number of shares,
@/@ 8,004 @/@ 7,987
fully diluted (millions)
Earnings per share, fully
= 2.65 = 1.54
diluted (SEK)
NET SALES BY SEGMENT BY QUARTER
(SEK m.)
Year-to-date
2000 1999
0003A 0006A 0009A 0012A 9903A 9906A 9909A 9912A
Network
Operators &
Service
Providers 38,718 84,819 132,693 194,074 28,505 64,314 99,208 149,943
Consumer 14,794 28,145 42,483 56,343 9,696 20,064 29,797 46,444
Products
Enterprise
Solutions 3,858 7,864 11,635 17,479 3,446 7,841 11,949 17,345
Other
operations 5,343 9,935 14,269 19,027 3,312 7,301 11,326 16,750
Less :
Intersegment
sales -3,628 -6,645 -9,620 -13,354 -3,388 -7,137 -10,632 -15,079
Total 59,085 124,118 191,460 273,569 41,571 92,383 141,648 215,403
Change %
0003A 0006A 0009A 0012A
Network Operators &
Service Providers 36% 32% 34% 29%
Consumer Products 53% 40% 43% 21%
Enterprise Solutions 12% 0% -3% 1%
Other operations 61% 36% 26% 14%
Less : Intersegment
sales 7% -7% -10% -11%
Total 42% 34% 35% 27%
Isolated quarters
2000 1999
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Network
Operators
& Service
Providers 38,718 46,101 47,874 61,381 28,505 35,809 34,894 50,735
Consumer
Products 14,794 13,351 14,338 13,860 9,696 10,368 9,733 16,647
Enterprise 3,858 4,006 3,771 5,844 3,446 4,395 4,108 5,396
Solutions
Other 5,343 4,591 4,334 4,758 3,312 3,989 4,025 5,424
operations
Less :
Intersegment
sales -3,628 -3,016 -2,975 -3,734 -3,388 -3,749 -3,495 -4,447
Total 59,085 65,033 67,342 82,109 41,571 50,812 49,265 73,755
Change %
Q1 Q2 Q3 Q4
Network Operators &
Service Providers 36% 29% 37% 21%
Consumer Products 53% 29% 47% -17%
Enterprise Solutions 12% -9% -8% 8%
Other operations 61% 15% 8% -12%
Less : Intersegment
sales 7% -20% -15% -16%
Total 42% 28% 37% 11%
ORDERS BOOKED BY SEGMENT BY QUARTER
(SEK m.)
Year-to-date
2000 1999
0003A 0006A 0009A 0012A 9903A 9906A 9909A 9912A
Network
Operators
& Service
Providers 57,465 102,735 152,262 212,440 32,672 69,879 110,916 151,762
Consumer 14,562 27,988 42,123 57,001 10,116 20,196 31,948 47,552
Products
Enterprise
Solutions 5,486 9,428 13,097 17,834 4,259 8,835 13,290 17,978
Other
operations 5,854 10,770 14,724 18,573 3,795 8,134 12,769 22,021
Less:
Intersegment
sales -3,893 -6,726 -9,340 -13,504 -3,381 -7,371 -11,111 -15,485
Total 79,474 144,195 212,866 292,344 47,461 99,673 157,812 223,828
Change %
0003A 0006A 0009A 0012A
Network Operators &
Service Providers 76% 47% 37% 40%
Consumer Products 44% 39% 32% 20%
Enterprise Solutions 29% 7% -1% -1%
Other operations 54% 32% 15% -16%
Less: Intersegment
sales 15% -9% -16% -13%
Total 67% 45% 35% 31%
Isolated quarters
2000 1999
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Network
Operators &
Service
Providers 57,465 45,270 49,527 60,178 32,672 37,207 41,037 40,846
Consumer
Products 14,562 13,426 14,135 14,878 10,116 10,080 11,752 15,604
Enterprise
5,486 3,942 3,669 4,737 4,259 4,576 4,455 4,688
Solutions
Other 5,854 4,915 3,954 3,849 3,795 4,339 4,635 9,252
operations
Less:
Intersegment
sales -3,893 -2,832 -2,614 -4,164 -3,381 -3,990 -3,740 -4,374
Total 79,474 64,721 68,671 79,478 47,461 52,212 58,139 66,016
Change %
Q1 Q2 Q3 Q4
Network Operators & 76% 22% 21% 47%
Service Providers
Consumer Products 44% 33% 20% -5%
Enterprise Solutions 29% -14% -18% 1%
Other operations 54% 13% -15% -58%
Less: Intersegment 15% -29% -30% -5%
sales
Total 67% 24% 18% 20%
NET SALES BY MARKET AREA BY QUARTER
(SEK m.)
Year-to-date
2000 1999
0003A 0006A 0009A 0012A 9903A 9906A 9909A 9912A
Western 23,578 47,011 70,090 100,234 17,350 36,374 55,890 85,329
Europe*
Central-
and
Eastern
Europe, 7,323 16,799 25,850 37,701 4,779 12,621 19,528 29,736
Middle
East &
Africa
North
America 8,549 19,263 27,704 35,193 4,179 11,387 17,610 25,175
Latin 7,781 17,334 28,953 44,118 4,920 12,186 18,916 30,263
America
Asia 11,854 23,711 38,863 56,323 10,343 19,815 29,704 44,900
Pacific
Total 59,085 124,118 191,460 273,569 41,571 92,383 141,648 215,403
* Of
which
Sweden 2,380 4,371 6,704 8,732 1,685 3,868 5,461 7,551
* Of 22,052 44,031 65,754 94,293 16,261 34,299 52,411 80,345
which EU
Change %
0003A 0006A 0009A 0012A
Western Europe* 36% 29% 25% 17%
Central- and Eastern
Europe,
Middle East & Africa 53% 33% 32% 27%
North America 105% 69% 57% 40%
Latin America 58% 42% 53% 46%
Asia Pacific 15% 20% 31% 25%
Total 42% 34% 35% 27%
* Of which Sweden 41% 13% 23% 16%
* Of which EU 36% 28% 25% 17%
Isolated quarters
2000 1999
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Western
Europe* 23,578 23,433 23,079 30,144 17,350 19,024 19,516 29,439
Central-
and
Eastern
Europe,
Middle
East &
Africa 7,323 9,476 9,051 11,851 4,779 7,842 6,907 10,208
North
America 8,549 10,714 8,441 7,489 4,179 7,208 6,223 7,565
Latin 7,781 9,553 11,619 15,165 4,920 7,266 6,730 11,347
America
Asia 11,854 11,857 15,152 17,460 10,343 9,472 9,889 15,196
Pacific
Total 59,085 65,033 67,342 82,109 41,571 50,812 49,265 73,755
* Of which 2,380 1,991 2,333 2,028 1,685 2,183 1,593 2,090
Sweden
* Of which
EU 22,052 21,980 21,723 28,539 16,261 18,038 18,112 27,934
Change %
Q1 Q2 Q3 Q4
Western Europe* 36% 23% 18% 2%
Central- and Eastern
Europe,
Middle East & Africa 53% 21% 31% 16%
North America 105% 49% 36% -1%
Latin America 58% 31% 73% 34%
Asia Pacific 15% 25% 53% 15%
Total 42% 28% 37% 11%
* Of which Sweden 41% -9% 46% -3%
* Of which EU 36% 22% 20% 2%
ORDERS BOOKED BY MARKET AREA BY QUARTER
(SEK m.)
Year-to-date
2000 1999
0003A 0006A 0009A 0012A 9903A 9906A 9909A 9912A
Western
Europe* 25,048 50,870 71,807 105,684 19,096 40,380 63,882 95,707
Central-
and Eastern
Europe,
Middle East
& Africa 17,388 24,503 32,104 40,972 9,197 14,764 25,786 30,626
North 9,148 19,082 27,326 37,977 6,024 12,523 19,622 27,468
America
Latin 9,695 19,312 33,053 44,959 3,432 11,032 17,816 27,797
America
Asia Pacific 18,195 30,428 48,576 62,752 9,712 20,974 30,706 42,230
Total 79,474 144,195 212,866 292,344 47,461 99,673 157,812 223,828
* Of which 2,924 6,010 7,983 9,876 1,565 3,517 5,248 7,182
Sweden
* Of which 23,261 47,523 67,194 99,951 17,826 37,990 60,050 90,562
EU
Change %
0003A 0006A 0009A 0012A
Western Europe* 31% 26% 12% 10%
Central- and Eastern
Europe,
Middle East & Africa 89% 66% 25% 34%
North America 52% 52% 39% 38%
Latin America 182% 75% 86% 62%
Asia Pacific 87% 45% 58% 49%
Total 67% 45% 35% 31%
* Of which Sweden 87% 71% 52% 38%
* Of which EU 30% 25% 12% 10%
Isolated quarters
2000 1999
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Western Europe* 25,048 25,822 20,937 33,877 19,096 21,284 23,502 31,825
Central- and 17,388 7,115 7,601 8,868 9,197 5,567 11,022 4,840
Eastern Europe,
Middle East &
Africa
North America 9,148 9,934 8,244 10,651 6,024 6,499 7,099 7,846
Latin America 9,695 9,617 13,741 11,906 3,432 7,600 6,784 9,981
Asia Pacific 18,195 12,233 18,148 14,176 9,712 11,262 9,732 11,524
Total 79,474 64,721 68,671 79,478 47,461 52,212 58,139 66,016
* Of which 2,924 3,086 1,972 1,893 1,565 1,952 1,731 1,934
Sweden
* Of which EU 23,261 24,262 19,671 32,757 17,826 20,164 22,060 30,512
Change %
Q1 Q2 Q3 Q4
Western Europe* 31% 21% -11% 6%
Central- and Eastern
Europe,
Middle East & Africa 89% 28% -31% 83%
North America 52% 53% 16% 36%
Latin America 182% 27% 103% 19%
Asia Pacific 87% 9% 86% 23%
Total 67% 24% 18% 20%
* Of which Sweden 87% 58% 14% -2%
* Of which EU 30% 20% -11% 7%
ADJUSTED OPERATING INCOME AND OPERATING MARGIN PER SEGMENT PER QUARTER
(SEK m.)
Year-to-date
2000 1999
0003A 0006A 0009A 0012A 9903A 9906A 9909A 9912A
Network
Operators &
Service
Providers 5,760 15,581 23,688 33,072 2,108 5,758 10,919 19,637
Consumer
Products 457 -1,829 -5,932 -16,195 -23 -56 -675 253
Enterprise
Solutions 29 -21 -256 22 -222 -216 -382 64
Other
543 1,060 1,925 1,708 221 629 426 403
operations
Unallocated * -414 -1,257 -1,171 -1,858 -205 -666 -1,098 -2,439
Total 6,375 13,534 18,254 16,749 1,879 5,449 9,190 17,918
Adjustments
Non-operational
items 0 5,838 7,264 7,033 -93 -287 -287 -328
Additional 0 0 0 -8,000 0 0 0 0
restructuring
Capital gain
Juniper
Networks 0 0 0 15,383 0 0 0 0
As percentage of Net Sales
2000 1999
0003A 0006A 0009A 0012A 9903A 9906A 9909A 9912A
Network Operators & 15% 18% 18% 17% 7% 9% 11% 13%
Service Providers
Consumer Products 3% -6% -14% -29% 0% 0% -2% 1%
Enterprise Solutions 1% 0% -2% 0% -6% -3% -3% 0%
Other operations 10% 11% 13% 9% 7% 9% 4% 2%
Total 11% 11% 10% 6% 5% 6% 6% 8%
Isolated quarters
2000 1999
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Network
Operators &
Service 5,760 9,821 8,107 9,384 2,108 3,650 5,161 8,718
Providers
Consumer 457 - 2,286 -4,103 -10,263 -23 -33 -619 928
Products
Enterprise
Solutions 29 -50 -235 278 -222 6 -166 446
Other
operations 543 517 865 -217 221 408 -203 -23
Unallocated
* -414 -843 86 -687 -205 -461 -432 -1,341
Total 6,375 7,159 4,720 -1,505 1,879 3,570 3,741 8,728
Adjustments
Non-
operational
items 0 5,838 1,426 -231 -93 -194 0 -41
Additional
restructuring 0 0 0 -8,000 0 0 0 0
Capital
gain Juniper 0 0 0 15,383 0 0 0 0
Networks
As percentage of Net Sales
2000 1999
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Network Operators &
Service Providers 15% 21% 17% 15% 7% 10% 15% 17%
Consumer Products 3% -17% -29% -74% 0% 0% -6% 6%
Enterprise Solutions 1% -1% -6% 5% -6% 0% -4% 8%
Other operations 10% 11% 20% -5% 7% 10% -5% 0%
Total 11% 11% 7% -2% 5% 7% 8% 12%
* "Unallocated" consists mainly of costs for corporate staffs,
certain goodwill amortization and non-operational gains and losses
NUMBER OF EMPLOYEES PER SEGMENT PER QUARTER
2000 1999
0003A 0006A 0009A 0012A 9903A 9906A 9909A 9912A
Network 63,616 65,005 66,973 70,317 65,530 65,909 65,359 64,695
Operators &
Service
Providers
Consumer
Products 17,290 17,710 18,137 16,840 14,116 14,053 14,970 16,446
Enterprise 9,130 8,687 8,739 8,324 9,856 10,329 10,262 9,615
Solutions
Other 11,257 8,839 8,461 8,520 11,046 11,278 11,474 11,525
operations
Unallocated 1,030 1,076 1,084 1,128 669 809 712 1,009
Total 102,323 101,317 103,394 105,129 101,217 102,378 102,777 103,290
Change %
Q1 Q2 Q3 Q4
Network Operators & -3% -1% 2% 9%
Service Providers
Consumer Products 22% 26% 21% 2%
Enterprise Solutions -7% -16% -15% -13%
Other operations 2% -22% -26% -26%
Unallocated 54% 33% 52% 12%
Total 1% -1% 1% 2%
CAPITAL GAINS/LOSSES SPECIFICATION
SEK b.
OPERATIONAL Q1 Q2 Q3 Q4 YTD
Network Operators
and
Service Providers
Saraide 0,7 0,1
Across Wireless 1,0
AU-system 0,2 0,1
iD2 0,3
Juniper 15,4
0,7 1,5 0,1 15,5 17,8
Consumer Products
Saraide 0,3 0,1
Across Wireless 0,5
0,3 0,5 0 0,1 0,9
Enterprise
Solutions
Information 0,1 0,1
Highway
Other Operations
Other 0,3 0,1 0,2 -0,1 0,5
Total 1,4 2,1 0,3 15,5 19,3
NON-OPERATIONAL
Energy Systems 4,5
Real estate 0,2 1,5 -0,2
Other -0,1
Total 0 4,7 1,5 -0,3 5,9
ERICSSON G/L NET OF 25,2
MINORITY
SEGMENT ORDERS BOOKED BY QUARTER
(SEK m.)
Isolated quarters 2000
Total
Q1 Q2 Q3 Q4 YTD
Systems 57,944 45,559 49,706 59,891 213,100
of which Mobile System 48,471 37,286 39,981 49,871 175,609
Multi Service Networks 9,473 8,273 9,725 10,020 37,491
Phones 14,562 13,426 14,135 14,878 57,001
Other operations 11,266 8,725 7,674 8,086 35,751
Less:Intersegment sales -4,298 -2,989 -2,844 -3,377 -13,508
Total 79,474 64,721 68,671 79,478 292,344
SEGMENT SALES BY QUARTER
(SEK m.)
Isolated quarters 2000
Q1 Q2 Q3 Q4 Total
YTD
Systems 38,910 46,433 48,087 61,253 194,683
of which Mobile System 32,481 37,858 38,722 49,022 158,083
Multi Service Networks 6,429 8,575 9,365 12,231 36,600
Phones 14,794 13,351 14,338 13,860 56,343
Other operations 9,297 8,504 8,087 10,039 35,927
Less:Intersegment sales -3,916 -3,255 -3,170 -3,043 -13,384
Total 59,085 65,033 67,342 82,109 273,569
SEGMENT ADJUSTED OPERATING INCOME BY QUARTER
(SEK m.)
Isolated quarters 2000
Total
Q1 Q2 Q3 Q4 YTD
Systems 5,753 9,812 8,242 9,416 33,223
Phones 457 -2,286 -4,103 -10,263 -16,195
Other operations 578 480 492 29 1,579
Unallocated* -413 -847 89 -687 -1,858
Total 6,375 7,159 4,720 -1,505 16,749
Adjustments
Non-operational items 0 5,838 1,426 -231 7,033
Additional
restructuring 0 0 0 -8,000 -8,000
Capital gain Juniper 0 0 0 15,383 15,383
Networks
* "Unallocated" consists mainly of costs for corporate staffs,
certain goodwill amortization and non-operational gains and losses
SEGMENT ADJUSTED OPERATING MARGIN BY QUARTER
Isolated quarters 2000
Q1 Q2 Q3 Q4 YTD
Systems 15% 21% 17% 15% 17%
Phones 3% -17% -29% -74% -29%
Other operations 6% -6% 6% 0% 4%
Total 11% 11% 7% -2% 6%
NUMBER OF EMPLOYEES PER SEGMENT PER QUARTER
2000
0003A 0006A 0009A 0012A
Systems 64,836 66,207 68,571 71,102
Phones 17,290 17,710 18,137 16,840
Other Operations 20,197 17,400 16,686 17,187
Total 102,323 101,317 103,394 105,129
------------------------------------------------------------
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The following files are available for download:
http://www.bit.se/bitonline/2001/01/26/20010126BIT00020/bit0001.doc
http://www.bit.se/bitonline/2001/01/26/20010126BIT00020/bit0002.pdf
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