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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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FORM 6-K

 

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REPORT OF FOREIGN ISSUER

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

October 11, 2007

 

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LM ERICSSON TELEPHONE COMPANY

(Translation of registrant’s name into English)

 

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Torshamnsgatan 23, Kista

SE-164 83, Stockholm, Sweden

(Address of principal executive offices)

 

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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 October 11, 2007, regarding “Sony Ericsson’s third quarter report 2007.”

 

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PRESS RELEASE		October 11, 2007

Continuing strong momentum at Sony Ericsson

Q3 Highlights:

 

•

Year-on-year volume growth of 31%

 

•

Continued volume growth driven by profitable lower priced phones

 

•

Good market reaction to new slider form-factor of W580 Walkman® phone

 

•

Successful launch of Sony Ericsson P1 smartphone

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the third quarter ended September 30, 2007 is as follows:

 

		Q3 2006			Q2 2007			Q3 2007
Number of units shipped (million)		19.8			24.9			25.9
Sales (Euro m.)		2,913			3,112			3,108
Gross Margin (%)		31.5	%		29.6	%		30.7	%
Operating Income (Euro m.)		427			315			393
Operating Income (%)		14.6	%		10.1	%		12.7	%
Income before taxes (Euro m.)		433			327			384
Net income (Euro m.)		298			220			267
Average Sales Price (Euro)		147			125			120

Units shipped in the quarter reached approximately 26 million, a 31% increase compared to the same period last year. Sales for the quarter were Euro 3,108 million, representing a year-on-year increase of 7%. Income before taxes for the quarter was Euro 384 million, representing a year-on-year decrease of 11%, which reflects the exceptional third quarter the company experienced in 2006. Net income for the quarter was Euro 267 million. In line with Sony Ericsson expectations, the increase in low- and mid-tier priced phones in the product portfolio in the third quarter resulted in a decline in Average Selling Price (ASP) to Euro 120.

“The quarter has seen Sony Ericsson continue to generate significant year-on-year volume growth with a portfolio of products spread across the widest variety of price points in the company’s history. Low- and mid-tier priced models such as the W200 Walkman® phone and simple ‘talk and text’ range of phones have been key volume drivers during the quarter, while the high-spec P1 smartphone and W580 slider Walkman® phone have been well received and strengthen the portfolio at the higher-end,” said Miles Flint, President of Sony Ericsson. “We are confident that the remainder of the year will see us further capitalize on this new broader portfolio with flag-ship Walkman® phone models such as the W910 and W960 plus the much anticipated 5 mega-pixel Cyber-shot™ K850 camera phone launching in time for the holiday season.”

During the quarter Sony Ericsson strengthened its position in North America and Latin America as well as Western Europe due to well accepted Walkman® and Cyber-shot™ phones. Previously announced activities to further strengthen the overall portfolio such as manufacturing and R&D activities in India, plus an R&D licensing agreement with Sagem continue to progress as planned.

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Sony Ericsson forecasts that the 2007 global handset market will be above 1.1 billion units. The company gained around 1% of market share compared with the same period last year and finished the third quarter at over 9%.

As communicated at the beginning of the year, a capital redemption of total Euro 300 million was paid to the parent companies in the quarter.

During the quarter Sony Ericsson announced that the company’s president Miles Flint will step down as of November 1^st 2007. Effective 1^st November Hideki ‘Dick’ Komiyama, currently Director, Chairman, Sony Electronics Inc., USA, and EVP Electronics Marketing and Sales Strategies, Sony Corporation, Japan, will succeed Miles Flint, who will remain as Executive Advisor to Dick Komiyama until the end of December 2007. Dick Komiyama will be based at Sony Ericsson’s offices in London.

Invoices from Ericsson amounted to Euro 152 million in the quarter, which was offset from the advance payment made by Sony Ericsson to Ericsson in the first quarter of 2007.

WALKMAN® and Cyber-shot™ are trademarks or registered trademarks of Sony Corporation.

EDITOR’S NOTES:

Financial Statements and Additional Information:

Financial Statements:

Consolidated Income Statement

Consolidated Income Statement – Year-to-Date

Consolidated Income Statement – Isolated Quarters

Consolidated Balance Sheet

Consolidated Statement of Cash Flows

Consolidated Statement of Cash Flows – Year-to-Date

Consolidated Statement of Cash Flows – Isolated Quarters

Additional Information:

Net Sales by Market Area by Quarter

- ENDS -

Sony Ericsson Mobile Communications was established as a 50:50 joint venture by Sony and Ericsson in October 2001, with global corporate functions located in London. The company serves the worldwide communications market with innovative and feature-rich mobile phones, accessories and PC-cards, and it has R&D sites in Europe, Japan, China, India and America. Sony Ericsson is the title sponsor of the Women’s Tennis Association, and works with the Association to promote the Sony Ericsson WTA Tour in over 80 cities during the year. For more information, please visit www.sonyericsson.com

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CONTACTS:

 

 

Investors/Analysts
Ericsson Investor Relations		Sony Investor Relations
Gary Pinkham (Stockholm) +46 8 719 0858		Shinji Tomita (London) +44 207 444 9713
		Tatsuyuki Sonoda (Tokyo) +81 3 6748 2180

Press/Media

Sony Ericsson Corporate Communications & PR

Aldo Liguori (London) +44 208 762 5860

Merran Wrigley (London) +44 208 762 5862

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.

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Sony Ericsson

CONSOLIDATED INCOME STATEMENT

 

		Jul-Sep
EUR million		2007			2006			Change
Net sales		3,108			2,913			7	%
Cost of sales		-2,154			-1,995			8	%
Gross profit		954			917			4	%
Gross margin %		30.7	%		31.5	%		-1	%
Research and development expenses		-280			-225			25	%
Selling and administrative expenses		-280			-287			-3	%
Operating expenses		-560			-511			9	%
Other operating income, net		-1			21			-105	%
Operating income		393			427			-8	%
Operating margin %		12.7	%		14.6	%		-2	%
Financial income		7			8			-16	%
Financial expenses		-16			-1			-
Income after financial items		384			433			-11	%
Taxes		-109			-127			-14	%
Minority interest		-8			-8			-2	%
Net income		267			298			-10	%
Number of units shipped (million)		25.9			19.8			31	%
ASP (EUR)		120			147			-19	%

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Sony Ericsson

CONSOLIDATED INCOME STATEMENT

 

		Jan-Sep
EUR million		2007			2006			Change
Net sales		9,145			7,177			27	%
Cost of sales		-6,384			-5,089			25	%
Gross profit		2,760			2,088			32	%
Gross margin %		30.2	%		29.1	%		1	%
Research and development expenses		-824			-650			27	%
Selling and administrative expenses		-885			-719			23	%
Operating expenses		-1,709			-1,369			25	%
Other operating income, net		2			55			-95	%
Operating income		1,055			773			36	%
Operating margin %		11.5	%		10.8	%		1	%
Financial income		43			25			73	%
Financial expenses		-25			-2			-
Income after financial items		1,073			796			35	%
Taxes		-306			-224			36	%
Minority interest		-27			-22			24	%
Net income		741			550			35	%
Number of units shipped (million)		72.6			48.8			49	%
ASP (EUR)		126			147			-14	%

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Sony Ericsson

CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS

 

		2007									2006
EUR million		Q3			Q2			Q1			Q4			Q3			Q2			Q1
Net sales		3,108			3,112			2,925			3,782			2,913			2,272			1,992
Cost of sales		-2,154			-2,192			-2,039			-2,686			-1,995			-1,625			-1,469
Gross profit		954			921			886			1,096			917			647			524
Gross margin %		30.7	%		29.6	%		30.3	%		29.0	%		31.5	%		28.5	%		26.3	%
Research and development expenses		-280			-283			-261			-256			-225			-223			-202
Selling and administrative expenses		-280			-321			-284			-367			-287			-246			-186
Operating expenses		-560			-604			-545			-623			-511			-470			-388
Other operating income, net		-1			-2			5			10			21			26			7
Operating income		393			315			346			484			427			203			143
Operating margin %		12.7	%		10.1	%		11.8	%		12.8	%		14.6	%		8.9	%		7.2	%
Financial income		7			18			18			19			8			8			9
Financial expenses		-16			-6			-2			0			-1			0			0
Income after financial items		384			327			362			502			433			211			151
Taxes		-109			-97			-100			-43			-127			-64			-34
Minority interest		-8			-10			-9			-12			-8			-5			-9
Net income		267			220			254			447			298			143			109
Number of units shipped (million)		25.9			24.9			21.8			26.0			19.8			15.7			13.3
ASP (EUR)		120			125			134			146			147			145			149

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Sony Ericsson

CONSOLIDATED BALANCE SHEET

 

EUR million		Sep 30 2007		Jun 30 2007		Dec 31 2006		Sept 30 2006
ASSETS
Total fixed and financial assets		511		498		469		316
Current assets
Inventories		620		477		437		578
Accounts receivables		1,803		1,831		1,653		1,347
Other assets		544		845		310		249
Other short-term cash investments		954		1,071		1,580		1,098
Cash and bank		804		659		693		763
Total current assets		4,725		4,882		4,673		4,035
Total assets		5,236		5,380		5,141		4,351
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity		1,663		1,702		1,781		1,353
Minority interest		70		63		45		37
Total equity		1,733		1,764		1,826		1,391
Total long-term liabilities		22		21		20		17
Accounts payable		1,602		1,371		1,276		1,118
Other current liabilities		1,879		2,224		2,019		1,825
Total current liabilities		3,481		3,595		3,296		2,944
Total shareholders’ equity and liabilities		5,236		5,380		5,141		4,351
Net cash*		1,758		1,729		2,272		1,795

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

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS

 

		Jul-Sep
EUR million		2007		2006
OPERATIONS
Net income		267		298
Adjustments to reconcile net income to cash		32		20
		299		318
Changes in operating net assets		88		-21
Cash flow from operating activities		387		297
INVESTMENTS
Investing activities		-53		-36
Cash flow from investing activities		-53		-36
FINANCING
Financing activities		- 300		- 2
Cash flow from financing activities		-300		-2
Net change in cash		34		259
Cash, beginning of period		1,730		1,595
Translation difference in Cash		-6		7
Cash, end of period		1,758		1,861

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS

 

		Jan-Sep
EUR million		2007		2006
OPERATIONS
Net income		741		550
Adjustments to reconcile net income to cash		90		62
		831		612
Changes in operating net assets		-349		50
Cash flow from operating activities		482		662
INVESTMENTS
Investing activities		-138		-108
Cash flow from investing activities		-138		-108
FINANCING
Financing activities		- 849		-212
Cash flow from financing activities		-849		-212
Net change in cash		-504		342
Cash, beginning of period		2,273		1,537
Translation difference in Cash		-11		-18
Cash, end of period		1,758		1,861

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

 

		Jul-Sep		Apr-Jun		Jan-Mar		Oct - Dec		Jul-Sep		Apr-Jun		Jan-Mar
EUR million		2007		2007		2007		2006		2006		2006		2006
OPERATIONS
Net income		267		220		254		447		298		143		109
Adjustments to reconcile net income to cash		32		30		28		23		20		22		20
		299		250		282		470		318		165		129
Changes in operating net assets		88		16		-454		50		-21		18		53
Cash flow from operating activities		387		266		-172		520		297		183		182
INVESTMENTS
Investing activities		-53		-31		-53		-26		-36		-29		-43
Cash flow from investing activities		-53		-31		-53		-26		-36		-29		-43
FINANCING
Financing activities		- 300		- 548		- 1		- 66		- 2		26		- 236
Cash flow from financing activities		-300		-548		-1		-66		-2		26		-236
Net change in cash		34		-312		-226		428		259		180		-97
Cash, beginning of period		1,730		2,045		2,273		1,861		1,595		1,428		1,537
Translation difference in Cash		-6		-3		-2		-16		7		-13		-12
Cash, end of period		1,758		1,730		2,045		2,273		1,861		1,595		1,428

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Sony Ericsson

NET SALES BY MARKET AREA BY QUARTER

 

EUR million		2007									2006
Isolated quarters		Q3			Q2			Q1			Q4			Q3			Q2			Q1
Europe, Middle East & Africa *		1,715			1,729			1,598			2,145			1,600			1,090			1,029
Americas		573			499			365			555			417			328			250
Asia		820			885			961			1,082			896			853			713
Total		3,108			3,112			2,925			3,782			2,913			2,272			1,992
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* of which Western Europe		1,103			1,102			1,078			1,478			1,115			748			674
		2007									2006
Sequential change (%)		Q3			Q2			Q1			Q4			Q3			Q2			Q1
Europe, Middle East & Africa *		-1	%		8	%		-26	%		34	%		47	%		6	%		-27	%
Americas		15	%		37	%		-34	%		33	%		27	%		31	%		-19	%
Asia		-7	%		-8	%		-11	%		21	%		5	%		20	%		20	%
Total		0	%		6	%		-23	%		30	%		28	%		14	%		-14	%
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* of which Western Europe		0	%		2	%		-27	%		33	%		49	%		11	%		-35	%
		2007									2006
Year over year change (%)		Q3			Q2			Q1			Q4			Q3			Q2			Q1
Europe, Middle East & Africa *		7	%		59	%		55	%		52	%		35	%		43	%		71	%
Americas		37	%		52	%		46	%		79	%		77	%		53	%		53	%
Asia		-8	%		4	%		35	%		83	%		42	%		33	%		36	%
Total		7	%		37	%		47	%		64	%		42	%		41	%		55	%
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* of which Western Europe		-1	%		47	%		60	%		45	%		33	%		42	%		84	%
		2007									2006
Year to date		0709			0706			0703			0612			0609			0606			0603
Europe, Middle East & Africa *		5,042			3,328			1,598			5,865			3,720			2,120			1,029
Americas		1,436			864			365			1,550			995			578			250
Asia		2,666			1,846			961			3,544			2,462			1,566			713
Total		9,145			6,037			2,925			10,959			7,177			4,264			1,992
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* of which Western Europe		3,283			2,179			1,078			4,014			2,537			1,422			674
		2007									2006
YTD year over year change (%)		0709			0706			0703			0612			0609			0606			0603
Europe, Middle East & Africa *		36	%		57	%		55	%		48	%		46	%		56	%		71	%
Americas		44	%		49	%		46	%		68	%		62	%		53	%		53	%
Asia		8	%		18	%		35	%		48	%		37	%		35	%		36	%
Total		27	%		42	%		47	%		51	%		45	%		47	%		55	%
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* of which Western Europe		29	%		53	%		60	%		46	%		46	%		59	%		84	%

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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.

 

Date: October 11, 2007