Trade receivables increased sequentially by SEK 6.7 b. to SEK 69.4 (62.7) b. and days sales outstanding (DSO) increased from 117 to 133 days impacted by higher proportion of deliveries late in the quarter and currency exchange effects. The consolidation of the LG-Nortel operation impacted trade receivables by SEK 1.0 b.

North America sales increased 128% year-over-year and 37% sequentially. The strong mobile data growth was further spurred by the launch of smartphones by all leading carriers. This development drives capacity investments in mobile broadband networks. Operators are also working on tiered price plans. In the quarter, Ericsson started volume deliveries of 4G/LTE.

Latin America sales decreased -12% year-over-year and grew 6% sequentially. Operator consolidation is ongoing in the region. Lower cost smartphones has created continuous growth in mobile broadband usage, pushing operators for investments in networks and services. LTE trials are ongoing in the region and additional 3G licenses are still to be auctioned in Costa Rica, Brazil and Mexico.

Northern Europe and Central Asia sales decreased by -7% year-over-year and increased 16% sequentially. Sales of mobile network infrastructure increased sequentially, mainly driven by major 2G expansions and 3G build-outs in the Eastern part of the region.

Western and Central Europe sales decreased -19% year-over-year and -16% sequentially due to cautious operator investments in parts of the region. Development in the region showed large variations, parts of Western Europe developed favorably while Central Europe in general was slow. Mobile broadband usage is rapidly increasing in the region and operators are marketing network quality and speed as a differentiator. 4G/LTE and network modernization is high on operators' agendas and new projects will be defined in coming quarters.

Services represented two thirds of the sales in the quarter, and operators' focus on efficiency continued to drive a strong interest in exploring business models such as network sharing and network transformations leading to opportunities both in services and networks.

Mediterranean sales decreased -17% year-over-year and increased 11% sequentially. Operator investments in Spain and Greece were low due to overall economic environment. In order to meet demand for mobile broadband services operators continued to focus on network modernization. Operators also have operational efficiency high on the agenda which created good demand for managed services and consulting.

Middle East sales decreased -20% year-over-year and by -4% sequentially. Services sales showed a continued growth in the quarter driven by demand for managed services. Services represented 46% of the business in the region this quarter.

Sales development showed large variations across the region but in general operators were cautious with investments. Egypt and Gulf Countries developed favorably, while Turkey and Saudi Arabia were slower. Although 2G is still in operators' focus, 3G related sales are becoming significant.

Sub-Saharan Africa sales decreased by -19% year-over-year and increased 22% sequentially. The region continued to be impacted by the global economic downturn with a tight credit environment. Operator consolidation is also taking place in the region, which temporarily reduced investments. Mobile subscriptions are developing positively with net additions for both voice and broadband services. New mobile licenses are being selected in certain countries.

India sales decreased -63% year-over-year and -41% sequentially due to cautious operator investments in the lead up to the 3G auctions as well as the ongoing government initiated security clearance process. The decline in business volumes mainly affected mobile infrastructure sales while recurring services business maintained its good development. The auctions for 3G and broadband wireless access operating at 2.3GHz took place in the quarter and deployments are expected to start in the second half of the year in a highly competitive market.

China and North East Asia sales decreased -36% year-over-year and by -7% sequentially. The year-over-year decline is related to timing of roll-out for 3G/WCDMA in mainland China. In 2009 a majority of network rollouts took place during the first half of the year. While operators on mainland China are still focused on successful 3G launches, operators across the region also now have 4G/LTE on the agenda. In Japan, demand for mobile broadband has had a positive effect on sales.

On June 30, 2010, the acquisition of Nortel's part of LG-Nortel was completed. This positions Ericsson as a leading vendor in Korea. Another milestone was the showcase of the first complete TD-LTE solution with end-to-end capabilities together with ST-Ericsson in China.

South East Asia and Oceania sales decreased -36% year-over-year and increased 4% sequentially. Sales of network equipment were weaker overall due to cautious investment in a number of markets. Highlights include network expansions in Indonesia and Bangladesh. Access to spectrum for 3G and also 4G/LTE remains a limitation in several markets. Overall there is an increasing interest for managed services among operators in several countries.

The region includes a mix of markets focused on long-term government sponsored fiber deployments as well as operator investment in HSPA upgrades and 4G/LTE trials. Other markets in the region are continuing to expand in 2G and 3G mobile networks.

Other includes sales of for example embedded modules, cables, power modules as well as licensing and IPR.

MARKET DEVELOPMENT

Growth rates are based on Ericsson and market estimates

Operator investment behavior continues to vary across regions and countries. In markets with strong data traffic uptake, network quality and efficiencies are high on operators' agendas.

Ericsson's addressable market was estimated to USD 350 b. in 2009 of which USD 200 b. relates to the core business mobile networks, converged networks, services and multimedia. USD 150 b. relates to platforms and handsets.

While the global mobile infrastructure market declined by more than 10% in 2009 with continued decline in the first quarter 2010, measured in USD, we believe that the fundamentals for longer-term positive development for the industry remain solid. Ericsson is well positioned to drive and benefit from this development.

Mobile broadband is being built-out across the world. However, HSPA still only covers 25% of the world's population.

Ericsson findings based on measurements in live networks show that global mobile data traffic almost doubled between Q109 to Q110. Mobile data traffic is forecasted to double annually over the next five years, primarily driven by 24/7 connectivity and usage of smartphones and laptops.

Voice traffic is still the main revenue source for operators even though data represents an increasing share as more and more consumers use data traffic generating devices, such as smartphones and laptops. For many large operators, mobile data revenues constitute 25% of total service revenues or more. In Japan there are operators whose data revenues account for more than 50% of total revenues. Tiered price plans for mobile broadband are on operators agendas and in some markets such plans have already been introduced.

From having connected places and currently people, operators are now moving towards connecting things. Ericsson believes that every device that can benefit from connectivity will be connected in the future. Ericsson envisions that by 2020 50 b. devices will be connected.

Data traffic uptake in mobile as well as fixed networks drives need for higher capacity in areas such as backhaul, aggregation, transport, routing based on IP and Ethernet technologies.

With operators' focus on increased network quality and efficiency, the ability to deal with high data volumes while maintaining telecom grade service levels is key. This also drives demand for services targeting the operational efficiency of operators, such as managed services and consulting.

There is continued good growth in the professional services market. The move toward all-IP and increased network complexity will create further demand for systems integration and consulting.

Mobile subscriptions are estimated to have increased by 190 million in the quarter, returning to higher growth levels. China and India alone accounted for 50% of net additions with 33 and 61 million respectively. Ericsson estimates that the global mobile subscriptions hit the 5 b. mark on July 8, 2010. Global mobile penetration is now 72%. GSM/GPRS/EDGE added 125 of the 190 million net subscription additions in the quarter and will continue to be an important technology for billions of users many years to come.

The global number of new WCDMA subscriptions grew by 40 million in the quarter to a total of 530 million, of which 245 million are estimated to be HSPA. Ericsson estimates that the global mobile broadband subscriptions will amount to more than 3.4 b. by 2015.

Demand for fixed broadband maintained a 3.5% growth rate during Q110 to add 16 million subscriptions for the quarter and reached 474 million. DSL remains the prevailing technology with around 66% of total subscribers. Top 3 countries, China, US and Japan, account for almost 50% of global fixed broadband subscriptions.

PARENT COMPANY INFORMATION

Net sales for the six-month period amounted to SEK 0.0 (0.3) b. and income after financial items was SEK 4.8 (5.2) b.

Major changes in the Parent Company's financial position for the six-month period include; investments in LG-Ericsson of SEK 1.8 b.; decreased current and non-current receivables from subsidiaries of SEK 5.1 b.; decreased cash, cash equivalents and short-term investments of SEK 7.5 b. and decreased current and non-current liabilities to subsidiaries of SEK 10.6 b.

During the second quarter the dividend payment of SEK 6.4 b., as decided by the Annual General Meeting, has been made. As per June 30, 2010, cash, cash equivalents and short-term investments amounted to SEK 54.9 (62.4) b.

In accordance with the conditions of the long-term variable remuneration program (LTV) for Ericsson employees, 1,316,895 shares from treasury stock were sold or distributed to employees during the second quarter. The holding of treasury stock at June 30, 2010 was 76,385,435 Class B shares.

OTHER INFORMATION

Acquisition of Nortel's stake of LG-Nortel completed

On June 30, 2010, Ericsson announced it had completed the acquisition of Nortel's majority shareholding (50%+1 share) in LG-Nortel, the joint venture of LG Electronics and Nortel Networks. The purchase price was USD 242 million on a cash and debt free basis. The acquisition will be accretive to Ericsson's earnings within a year.

LG-Nortel generated approximately USD 650 million of sales in 2009 and had 1,300 employees. LG-Nortel was consolidated by Ericsson as of June 30, 2010 and is included in segment Networks. The new name of the operation is LG-Ericsson.

Nomination committee appointed

On June 16, 2010 Ericsson announced that the nomination committee for the Annual General Meeting of Shareholders (AGM) 2011 had been appointed in accordance with the procedure resolved by the AGM 2010. The committee consists of Jacob Wallenberg (chairman of the nomination committee), Carl-Olof By, Caroline af Ugglas, Marianne Nilsson and Michael Treschow.

Assessment of risk environment

Ericsson's operational and financial risk factors and uncertainties are described under "Risk factors Assessment of risk environment" in our Annual Report 2009.

Risk factors and uncertainties in focus during the forthcoming six-month period for the Parent Company and the Ericsson Group include:

• Potential negative effects on operators' willingness to invest in network development due to a continued uncertainty in the financial markets and a weak economic business environment as well as uncertainty regarding the financial stability of suppliers, for example due to lack for borrowing facilities, or reduced consumer telecom spending, or increased pressure on us to provide financing;
• Effects on gross margins and/or working capital of the product mix in the Networks segment between sales of software, upgrades and extensions as well as break-in contracts;
• Effects on gross margins of the product mix in the global services segment including proportion of new network build-outs and share of new managed services deals with initial transition costs;
• A continued volatile sales pattern in the Multimedia segment or variability in our overall sales seasonality could make it more difficult to forecast future sales;
• Effects of the ongoing industry consolidation among our customers as well as between our largest competitors, e.g. with postponed investments and intensified price competition as a consequence;
• Changes in foreign exchange rates, in particular USD and EUR;
• Political unrest or instability in certain markets;
• Effects on production and sales from restrictions with respect to timely and adequate supply of materials, components and production capacity and other vital services on competitive terms;
• Natural disasters, effecting production, supply and transportation.

Ericsson conducts business in certain countries which are subject to trade restrictions or which are focused on by certain investors. We stringently follow all relevant regulations and trade embargos applicable to us in our dealings with customers operating in such countries. Moreover, Ericsson operates globally in accordance with Group level policies and directives for business ethics and conduct. In no way should our business activities in these countries be construed as supporting a particular political agenda or regime. We have activities in such countries mainly due to that certain customers with multi-country operations put demands on us to support them in all their markets.

Please refer further to Ericsson's Annual Report 2009, where we describe our risks and uncertainties along with our strategies and tactics to mitigate risk exposures or limit unfavorable outcomes.

Stockholm, July 23, 2010


Hans Vestberg, President and CEO

Telefonaktiebolaget LM Ericsson (publ)

Date for next report: October 22, 2010

AUDITORS' REVIEW REPORT

We have reviewed this report for the period January 1 to June 30, 2010, for Telefonaktiebolaget LM Ericsson (publ). The board of directors and the CEO are responsible for the preparation and presentation of this financial information in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this financial information based on our review.

We conducted our review in accordance with the Standard on Review Engagements SÖG 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity, issued by FAR SRS. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing in Sweden, RS, and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act regarding the Group and with the Swedish Annual Accounts Act regarding the Parent Company.

Stockholm, July 23, 2010

PricewaterhouseCoopers AB
Peter Clemedtson
Authorized Public Accountant

EDITOR'S NOTE

To read the complete report with tables, please go to: www.ericsson.com/investors/financial_reports/2010/6month10-en.pdf

Ericsson invites media, investors and analysts to a press conference at the Ericsson headquarters, Torshamnsgatan 23, Stockholm, at 09.00 (CET),
July 23.

An analysts, investors and media conference call will begin at 14.00 (CET).

Live webcasts of the press conference and conference call as well as supporting slides will be available at www.ericsson.com/press and www.ericsson.com/investors  

Video material will be published during the day on www.ericsson.com/broadcast_room

FOR FURTHER INFORMATION, PLEASE CONTACT

Henry Sténson, Senior Vice President, Communications
Phone: +46 10 719 4044
E-mail: investor.relations@ericsson.com or media.relations@ericsson.com

Investors

Åse Lindskog, Vice President,
Head of Industry and Investor Relations
Phone: +46 10 719 9725, +46 730 244 872
E-mail: investor.relations@ericsson.com


Susanne Andersson,
Investor Relations
Phone: +46 10 719 4631
E-mail: investor.relations@ericsson.com

Andreas Hedemyr,
Investor Relations
Phone: +46 10 714 3748
E-mail: investor.relations@ericsson.com

Media

Ola Rembe, Vice President,
Head of Corporate Public and Media Relations
Phone: +46 10 719 9727, +46 730 244 873
E-mail: media.relations@ericsson.com

Corporate Public & Media Relations
Phone: +46 10 719 69 92
E-mail: medial.relations@ericsson.com

Telefonaktiebolaget LM Ericsson (publ)
Org. number: 556016-0680
Torshamnsgatan 23
SE-164 83 Stockholm
Phone: +46 10 719 0000
www.ericsson.com  

DISCLOSURE PURSUANT TO THE SWEDISH SECURITIES MARKETS ACT

Ericsson discloses the information provided herein pursuant to the Securities Markets Act. The information was submitted for publication at 07.30 CET, on July 23, 2010.

Safe Harbor Statement of Ericsson under the US Private Securities Litigation Reform Act of 1995;

All statements made or incorporated by reference in this release, other than statements or characterizations of historical facts, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by us. Forward-looking statements can often be identified by words such as "anticipates", "expects", "intends", "plans", "predicts", "believes", "seeks", "estimates", "may", "will", "should", "would", "potential", "continue", and variations or negatives of these words, and include, among others, statements regarding: (i) strategies, outlook and growth prospects; (ii) positioning to deliver future plans and to realize potential for future growth; (iii) liquidity and capital resources and expenditure, and our credit ratings; (iv) growth in demand for our products and services; (v) our joint venture activities; (vi) economic outlook and industry trends; (vii) developments of our markets; (viii) the impact of regulatory initiatives; (ix) research and development expenditures; (x) the strength of our competitors; (xi) future cost savings; (xii) plans to launch new products and services; (xiii) assessments of risks; (xiv) integration of acquired businesses; (xv) compliance with rules and regulations and (xvi) infringements of intellectual property rights of others.

In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements speak only as of the date hereof and are based upon the information available to us at this time. Such information is subject to change, and we will not necessarily inform you of such changes. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Important factors that may cause such a difference for Ericsson include, but are not limited to: (i) material adverse changes in the markets in which we operate or in global economic conditions; (ii) increased product and price competition; (iii) reductions in capital expenditure by network operators; (iv) the cost of technological innovation and increased expenditure to improve quality of service; (v) significant changes in market share for our principal products and services; (vi) foreign exchange rate or interest rate fluctuations; and (vii) the successful implementation of our business and operational initiatives.