tbr 2q11 ericsson initial response report
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TBR
T EC H N O LO G Y B U S I N ES S R ES EAR C H , I N C .
Telefon AB LM Ericsson
NETWORK BUSINESS QUARTERLYSM
1Q11 INITIAL RESPONSE
Publish Date: April 27, 2011 Author: Chris Antlitz ([email protected]), NMP Analyst Content Editor: Scott Dennehy, NMP Senior Analyst
First Calendar Quarter 2011
First Fiscal Quarter 2011 Ended March 31, 2011
TBR
Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc. 2
TBR Position Company Objectives
While the Networks business rides high, Ericsson is building out its services and multimedia portfolios to harness growth from emerging trends, such as cloud, mobile wallet, M2M and OSS/BSS evolution.
• Alliances with Akamai and Vantrix will help Ericsson accelerate its move into the cloud and mobile video.
• The acquisition of Telenor Connexion’s M2M platform adds critical assets that enable and manage connected devices.
Leverage managed services business to build long-term recurring revenue model
Ericsson signed nine new managed services contracts in 1Q11, five of which were extensions or expansions of legacy contracts.
Drive new initiatives and offerings to build traction for its “Networked Society” strategy
• Mobility, broadband and cloud form the core of Ericsson’s “Networked Society” strategy.
• The company has made a series of announcements to build momentum for its strategy, namely a device connection platform for machine-to-machine (M2M) solutions, mobile money services and an antenna integrated radio, all targeted at the cloud-based service delivery model.
• Ericsson also announced an alliance with Akamai Technologies to provide mobile cloud acceleration solutions.
Mitigate effect of parts shortages and rectify logistical and supply chain problems
Ericsson limited its reliance on supplies from Japan by bolstering its involvement with secondary suppliers and entering the spot market to satisfy its component needs.
Ericsson’s Networks unit powered nearly all of the company’s top-line growth and margin expansion in 1Q11
Executive Summary
-10%
-5%
0%
5%
10%
15%
20%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est.
In S
EK M
illio
ns
ERICSSON PROFITABILITY AND GROWTH
Total Revenue Gross Profit
Operating Profit Year-to-Year Revenue Growth
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SOURCE: TBR ESTIMATES AND ERICSSON
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Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc. 3
Key Developments
Networks unit pushing Ericsson forward as Global Services and Multimedia falter
• The Networks unit was the guiding force behind Ericsson’s excellent quarter in 1Q11, as the company’s top-line growth and more than doubling of operating margin was attributed to equipment sales.
• The broad global economic recovery is pushing operators to open the spigots and make critical investments in their networks. Sales of the RBS 6000, packet core, IP routers, and microwave backhaul were the fastest-growing areas under Ericsson’s equipment umbrella.
LTE will drive growth in Networks unit
• Major LTE contracts with operators like AT&T, Verizon and Vodafone Germany continue to ramp up, while a raft of new contracts are expected to be finalized in coming quarters following a wave of trials.
• With nearly 50% market share in LTE and that addition of TD-LTE solutions to its arsenal, Ericsson is well-positioned to help any operator roll out an LTE network. This cycle of LTE investment will spur equipment sales and drive services revenues as these new and complex networks require professional and deployment services.
Disaster in Japan had a marginal impact on supply chain
• Ericsson has been relatively unscathed by the tragedy in Japan. Only a few parts have been delayed due to the disaster, but Ericsson has quickly remedied the problem by ramping up orders to its secondary suppliers and using alternative components in its hardware.
• Revenue in Japan even increased during the quarter and became Ericsson’s second-largest country by sales at 8%, up from 4% in 1Q10. TBR believes sales to Japan could remain strong in coming quarters as the country injects stimulus into the economy to begin rebuilding.
Many LTE contracts will be awarded in 2011 following a wave of trials in 2010, auguring well for sustained growth in Ericsson’s Networks business
Executive Summary
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Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc. 4
Services sales declined on unfavorable currency and fewer SI projects, while Multimedia continues its search for a sustainable growth catalyst
Executive Summary
Segment Revenue Performance and Strategies
Networks SEK 33.2 billion (or $4.9 billion)
• Equipment growth was broad-based but skewed toward wireless and IP routing products.
• Growth in wireless infrastructure spanned 2G, 3G and LTE technologies as operators sought to expand coverage and capacity.
Global Services
SEK 17.4 billion
(or $2.6 billion)
• Global Services revenue declined 3.7% from 1Q10 on weak sales of professional services, particularly systems integration.
• Managed services and rollout were flat year-to-year as contracts waited to ramp and parts delays stalled the completion of outstanding deployments. As such, these segments should see growth in coming quarters.
Multimedia
SEK 2.3 billion
(or $337 million)
Ericsson’s multimedia division continues to build capabilities primarily through partnerships. In addition to the Vantrix alliance for mobile video optimization and delivery, Ericsson is collaborating with Polycom to enable operators to deliver hosted telepresence services.
24,704 25,472 26,087 36,445 33,249
18,098 20,080 19,076
22,869 17,435
2,310 2,420 2,318
3,469
2,282
0
10,000
20,000
30,000
40,000
50,000
60,000
1Q10 2Q10 3Q10 4Q10 1Q11
In S
EK
Mil
lio
ns
ERICSSON REVENUE BY SEGMENT
Multimedia Global Services Networks
TBR
SOURCE: TBR AND ERICSSON
$45,112
$8,545
$680 $17
$28
$52,966
42,000
44,000
46,000
48,000
50,000
52,000
54,000
1Q10Revenue
Networks ProfessionalServices
NetworkRollout
Multimedia 1Q11 Revenue
In S
EK
Mil
lion
s
ERICSSON 1Q11 SEGMENT REVENUE GROWTH TBR TBR
TBR
SOURCE: TBR AND ERICSSON
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Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc. 5
Gross margin rose to 38.5%, allaying concerns that 3G sales in India would cause aggregate margins to contract
Financial Model Strategy
Revenues
Ericsson’s top-line revenue advanced 17.4% year-to-year to SEK 53 billion (or $7.8 billion) thanks to the Networks unit, as Global Services and Multimedia were weak.
Expenses
• The inclusion of LG-Ericsson and a push into TD-LTE caused R&D and SG&A to grow over 10% year-to-year at constant currency.
• Still, opex as a percentage of revenue remains several hundred basis points below 1Q10 levels, indicating Ericsson’s cost rationalization and restructuring initiatives are working.
Margins
• Gross margin increased 170 basis points year-to-year to 38.5% on favorable equipment mix, a good balance between network expansions and upgrades, and efficiency gains in production.
• Aggregate adjusted operating margin more than doubled from 4.4% in 1Q10 to 11% in 1Q11 due to improvement in Networks profitability. Networks operating margin nearly tripled from a year ago to 17.3%.
28,527 30,235 29,337 40,995
32,578
7,008 7,158 5,775
7,131
6,441 7,526 7,751 7,689
8,592
7,991
0
10,000
20,000
30,000
40,000
50,000
60,000
1Q10 2Q10 3Q10 4Q10 1Q11
In S
EK
Mil
lion
s
ERICSSON OPERATING EXPENSES
Research & Development SG&A Cost of Sales
TBR
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SOURCE: TBR AND ERICSSON
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
1Q10 2Q10 3Q10 4Q10 1Q11
ERICSSON ADJUSTED OPERATING MARGIN BY SEGMENT
Networks Global Services Multimedia
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SOURCE: TBR AND ERICSSON
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Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc. 6
Ericsson makes further in-roads in TD-LTE, while raising the stakes in mobile payment and cloud services markets
Key Developments
Net
wo
rks
• Ericsson was approved by the Chinese Ministry of Industry and Information Technology (MIIT) to conduct a TD-LTE trial for China Mobile in the city of Shenzhen. Most vendors, including Huawei and ZTE, are vying for a piece of the 4G investment cycle in China.
• Though Chinese operators are still putting the finishing touches on their 3G networks and bulking up capacity on their 2G networks, all three incumbent carriers – China Mobile, Unicom and Telecom – are starting to seriously look into 4G for their long-term strategies. TBR expects these TD-LTE trials to ensue during 2011 and 2012, with the first commercial deployments taking place in 2013.
Mu
ltim
ed
ia
• To address growth in mobile video, Ericsson announced a partnership in March with Vantrix, a provider focused on mobile video optimization and delivery. The company will bundle Vantrix’s Bandwidth Optimizer with its own Multiservice Proxy mobile broadband traffic optimization solution to help manage and improve quality-of-experience over mobile networks.
• The multimedia division continues to build capabilities primarily through partnerships to boost its prospects in the market. In addition to the Vantrix alliance for mobile video optimization and delivery, Ericsson is collaborating with Polycom to enable operators to deliver hosted telepresence services.
• Ericsson launched its own version of mobile banking services in February. The company’s Money Services and Money Interconnect Service will enable operators and financial institutions to offer their services using a real-time, cross-border, cross-currency switching network.
• Ericsson is late to this market compared to competitors who launched in 2010, but TBR believes the additional effort taken to test and fulfill some of the regulatory and legal requirements, in close collaboration with operator customers, will ensure rapid uptake in the target markets.
Go to Market & Product Strategies
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Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc. 7
Ericsson is readying its services arm for the 50 billion devices it projects will be connected to global networks by 2020 Key Developments
Glo
bal
Se
rvic
es
• Ericsson’s global services strategy seeks to position the company as a one-stop M2M shop, with end-to-end solutions, capable of helping operators modernize their networks to meet current and future data traffic demands from these connected devices.
• To this end, the company made aggressive attempts to enhance its cloud services by launching its Device Connection Platform, a solution for cloud-based M2M services.
• In April, Ericsson followed the platform launch with the acquisition of Telenor Connexion, a MVNO that was wholly owned by Telenor Group of Norway. Telenor Connexion will support its existing M2M service using Ericsson’s new platform.
Son
y Er
icss
on
• While unit shipments continue to fall due to weak demand for feature phones, average selling price (ASP) is on the rise as sales mix skews increasingly toward smartphones. Sony-Ericsson’s all-in bet on Android and its aggressive stance on costs has returned the joint venture to profitability and puts it on track for steady margin improvement.
• In 1Q11, over 60% of Sony-Ericsson’s total sales were from smartphones. The company hopes that number will grow quickly as it pushes to expand its presence in the United States.
• Unlike parent company Ericsson, Sony-Ericsson is being adversely affected by the events in Japan, which have limited its access to high-end LCD screens, batteries and circuit boards for its devices. TBR believes the full impact of these issues will be reflected in 2Q11 results.
ST-E
rics
son
• Despite several rounds of restructuring and reorganization, ST-Ericsson still cannot stem revenue declines and operating losses. Sales plunged 27% year-to-year to $444 million and operating losses widened as volume fell.
• The joint venture is undergoing a product shift away from legacy technologies and toward new, higher-value chipsets. Though this transition must occur to keep the unit viable, funds are running out and decisions will have to be made by the parent companies on how to proceed.
Go to Market & Product Strategies
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Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc. 8
Ericsson is focusing a portion of its R&D spend on TD-LTE solutions, which will be marketed to operators in APAC as an alternative to FDD-LTE
Resource Management Strategy
Personnel Changes • Ericsson ended 1Q11 with 91,546 employees, up
1,285, or 5.8%, year-to-year. Headcount reductions were concentrated in Scandinavia and Western Europe, in line with the company’s resource shift to lower-cost regions like BRIC and Eastern Europe.
• Fredrik Jejdling was appointed as Ericsson’s new head of operations in India, Nepal and Bhutan, effective June 1, 2011. Jejdling replaces Gowton Achibar, who will take on new responsibilities within Ericsson.
Investments/R&D Focus Ericsson’s April acquisition of Telenor Connexion’s M2M platform signals the vendor is gearing up to make a push in the management of connected devices. Ericsson will merge Connexion’s platform with its homegrown Device Connection Platform to create customized M2M services for enterprises.
Ericsson’s Worldwide Operations
The most aggressive hiring took place in India – up 738 positions
year-to-year to total nearly 7,500. 13,450 13,857 13,430 13,498 13,531
49,757 49,349 48,270 48,646 48,576
17,196 18,057 20,007 20,936 22,045
6,134 6,150 6,353 7,181 7,394
0
20,000
40,000
60,000
80,000
100,000
1Q10 2Q10 3Q10 4Q10 1Q11
Nu
mb
er o
f Em
ploy
ees
ERICSSON EMPLOYEE HEADCOUNT BY GEOGRAPHIC REGION
CALA APAC EMEA North America
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SOURCE: TBR AND ERICSSON
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Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc. 9
Income Statement ERICSSON
Consolidated Income Statement
(In Thousands Swedish Kronor (SEK))
FISCAL QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est.
CALENDAR QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est.
Revenue 45,112,000 47,972,000 47,481,000 62,783,000 52,966,000 57,086,680
Cost of Sales 28,527,000 30,235,000 29,337,000 40,995,000 32,578,000 35,000,000
Gross Profit 16,585,000 17,737,000 18,144,000 21,788,000 20,388,000 22,086,680
Research and Development 7,526,000 7,751,000 7,689,000 8,592,000 7,991,000 8,005,750
Selling and General Administrative 7,008,000 7,158,000 5,775,000 7,131,000 6,441,000 7,000,000
Other Operating Revenue and Costs 302,000 500,000 620,000 581,000 343,000 511,000
Share in Earnings of Joint Ventures (372,000) (308,000) (90,000) (402,000) (468,000) (317,000)
Operating Income 1,981,000 3,020,000 5,210,000 6,244,000 5,831,000 7,274,930
Financial Income 278,000 470,000 168,000 131,000 302,000 267,750
Financial Expenses (438,000) (596,000) (302,000) (383,000) (306,000) (396,750)
Income before Taxes 1,821,000 2,894,000 5,076,000 5,992,000 5,827,000 7,145,930
Provision for (Benefit from) Income Taxes 547,000 867,000 1,523,000 1,611,000 1,747,000 2,143,779
Net Income 1,274,000 2,027,000 3,553,000 4,381,000 4,080,000 5,002,151
PERCENTAGE OF REVENUE
Revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of Sales 63.2% 63.0% 61.8% 65.3% 61.5% 61.3%
Gross Margin 36.8% 37.0% 38.2% 34.7% 38.5% 38.7%
Research and Development 16.7% 16.2% 16.2% 13.7% 15.1% 14.0%
Selling and General Administrative 15.5% 14.9% 12.2% 11.4% 12.2% 12.3%
Share in Earnings of Joint Ventures -0.8% -0.6% -0.2% -0.6% -0.9% -0.6%
Operating Margin 4.4% 6.3% 11.0% 9.9% 11.0% 12.7%
Financial Income 0.6% 1.0% 0.4% 0.2% 0.6% 0.5%
Financial Expenses -1.0% -1.2% -0.6% -0.6% -0.6% -0.7%
Income before Taxes 4.0% 6.0% 10.7% 9.5% 11.0% 12.5%
Provision for (Benefit from) Income Taxes 1.2% 1.8% 3.2% 2.6% 3.3% 3.8%
Net Margin 2.8% 4.2% 7.5% 7.0% 7.7% 8.8%
YEAR-TO-YEAR GROWTH
Revenue -9.0% -8.0% 2.3% 7.6% 17.4% 19.0%
Cost of Sales -10.7% -12.4% -3.7% 4.2% 14.2% 15.8%
Gross Profit -5.8% 0.7% 13.6% 14.7% 22.9% 24.5%
Research and Development 6.3% -8.3% -6.4% -7.7% 6.2% 3.3%
Selling and General Administrative 2.1% -3.8% 9.4% -2.6% -8.1% -2.2%
Share in Earnings of Joint Ventures 83.4% 85.6% 94.2% 72.5% -25.8% -2.9%
Operating Income 11.6% 149.0% 355.4% 249.6% 194.3% 140.9%
Financial Income -77.9% 11650.0% -43.2% -58.3% 8.6% -43.0%
Financial Expenses 4.2% -654.4% -2.7% 46.7% 30.1% 33.4%
Income before Taxes -29.4% 154.3% 342.9% 333.9% 220.0% 146.9%
Provision for (Benefit from) Income Taxes -26.6% 154.3% 307.2% 145.6% 219.4% 147.3%
Net Income -30.5% 154.3% 360.2% 504.3% 220.3% 146.8%
SOURCE: TBR ESTIMATES AND ERICSSON
* Restated according to IFRS and IAS regulations
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Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc. 10
Income Statement ERICSSON
Consolidated Income Statement
(In $ Thousands)
FISCAL QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est.
CALENDAR QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Est.
Revenue 6,354,927$ 6,351,013$ 6,531,486$ 9,268,654$ 7,819,371$ 8,427,707$
Cost of Sales 4,018,598 4,002,812 4,035,598 6,052,092 4,809,490 5,167,050
Gross Profit 2,336,329 2,348,201 2,495,889 3,216,562 3,009,880 3,260,657
Research and Development 1,060,188 1,026,155 1,057,699 1,268,437 1,179,711 1,181,889
Selling and General Administrative 987,217 947,648 794,409 1,052,750 950,885 1,033,410
Other Operating Revenue and Costs 42,543 66,195 85,287 85,773 50,637 75,439
Share in Earnings of Joint Ventures -52,404 -40,776 -12,380 -59,347 -69,091 -46,799
Operating Income 279,063 399,818 716,688 921,802 860,831 1,073,998
Financial Income 39,162 62,223 23,110 19,340 44,584 39,528
Financial Expenses -61,701 -78,904 -41,543 -56,542 -45,175 -58,572
Income before Taxes 256,524 383,137 698,255 884,599 860,240 1,054,954
Provision for (Benefit from) Income Taxes 77,056 114,782 209,504 237,832 257,910 316,486
Net Income 179,468 268,355 488,751 646,767 602,330 738,468
PERCENTAGE OF REVENUE
Revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of Sales 63.2% 63.0% 61.8% 65.3% 61.5% 61.3%
Gross Margin 36.8% 37.0% 38.2% 34.7% 38.5% 38.7%
Research and Development 16.7% 16.2% 16.2% 13.7% 15.1% 14.0%
Selling and General Administrative 15.5% 14.9% 12.2% 11.4% 12.2% 12.3%
Share in Earnings of Joint Ventures -0.8% -0.6% -0.2% -0.6% -0.9% -0.6%
Operating Margin 4.4% 6.3% 11.0% 9.9% 11.0% 12.7%
Financial Income 0.6% 1.0% 0.4% 0.2% 0.6% 0.5%
Financial Expenses -1.0% -1.2% -0.6% -0.6% -0.6% -0.7%
Income before Taxes 4.0% 6.0% 10.7% 9.5% 11.0% 12.5%
Provision for (Benefit from) Income Taxes 1.2% 1.8% 3.2% 2.6% 3.3% 3.8%
Net Margin 2.8% 4.2% 7.5% 7.0% 7.7% 8.8%
YEAR-TO-YEAR GROWTH
Revenue -9.0% -8.0% 2.3% 7.6% 17.4% 19.0%
Cost of Sales -10.7% -12.4% -3.7% 4.2% 14.2% 15.8%
Gross Profit -5.8% 0.7% 13.6% 14.7% 22.9% 24.5%
Research and Development 6.3% -8.3% -6.4% -7.7% 6.2% 3.3%
Selling and General Administrative 2.1% -3.8% 9.4% -2.6% -8.1% -2.2%
Share in Earnings of Joint Ventures 83.4% 85.6% 94.2% 72.5% -25.8% -2.9%
Operating Income 11.6% 149.0% 355.4% 249.6% 194.3% 140.9%
Financial Income -77.9% 11650.0% -43.2% -58.3% 8.6% -43.0%
Financial Expenses 4.2% -654.4% -2.7% 46.7% 30.1% 33.4%
Income before Taxes -29.4% 154.3% 342.9% 333.9% 220.0% 146.9%
Provision for (Benefit from) Income Taxes -26.6% 154.3% 307.2% 145.6% 219.4% 147.3%
Net Income -30.5% 154.3% 360.2% 504.3% 220.3% 146.8%
SOURCE: TBR ESTIMATES AND ERICSSON
* Restated according to IFRS and IAS regulations
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Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc. 11
Balance Sheet ERICSSON
Consolidated Balance Sheet
(In Thousands Swedish Kronor (SEK))
FISCAL QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11
CALENDAR QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11
ASSETS
Cash, Equivalents, and Short-Term Investments 77,855,000 67,590,000 76,174,000 87,150,000 83,042,000
Inventories, Net 24,126,000 29,397,000 30,304,000 29,897,000 32,146,000
Accounts Receivable - Trade 62,695,000 69,385,000 57,831,000 61,127,000 60,622,000
Short-term Customer Financing 1,885,000 2,132,000 2,251,000 3,123,000 2,713,000
Other Receivables 15,853,000 17,429,000 18,705,000 17,146,000 19,745,000
Total Current Assets 182,414,000 185,933,000 185,265,000 198,443,000 198,268,000
Tangible Assets (P,P&E) 9,319,000 9,810,000 9,290,000 9,434,000 9,171,000
Intangible Assets 46,934,000 49,510,000 46,405,000 46,819,000 44,217,000
Equity in Associated Companies 11,286,000 11,596,000 10,079,000 9,803,000 8,662,000
Other Investments 240,000 266,000 276,000 219,000 239,000
Long-term Customer Financing 979,000 969,000 1,246,000 1,281,000 1,440,000
Deferred Tax Assets 14,710,000 16,053,000 14,208,000 12,737,000 13,090,000
Other Long-term Receivables 1,948,000 2,692,000 2,466,000 3,079,000 3,020,000
Total Non-current Assets 85,416,000 90,896,000 83,970,000 83,372,000 79,839,000
Total Assets 267,830,000 276,829,000 269,235,000 281,815,000 278,107,000
LIABILITIES AND EQUITY
Interest-bearing Liabilities 2,017,000 3,797,000 4,353,000 3,808,000 4,676,000
Accounts Payable 17,806,000 20,266,000 20,724,000 24,959,000 24,849,000
Other Current Liabilities 64,230,000 69,113,000 62,980,000 67,996,000 64,621,000
Total Current Liabilities 84,053,000 93,176,000 88,057,000 96,763,000 94,146,000
Pensions & Provisions 8,061,000 8,498,000 8,075,000 5,445,000 4,278,000
Long-term Liabilities 34,263,000 34,731,000 34,034,000 32,822,000 31,981,000
Total Liabilities 126,377,000 136,405,000 130,166,000 135,030,000 130,405,000
Minority Interest in Equity of Consolidated
Subsidiaries 1,163,000 2,115,000 1,674,000 1,679,000 1,560,000
Total Stockholders' Equity 140,290,000 138,309,000 137,395,000 145,106,000 146,142,000
Total Liabilities and Equity 267,830,000 276,829,000 269,235,000 281,815,000 278,107,000
FINANCIAL RATIOSDays Sales Outstanding 125.08 130.17 109.62 87.63 103.01
Turns on Inventory 4.87 4.52 3.93 5.45 4.20
Fixed Asset Turnover (Tangible Assets) 19.07 20.06 19.89 26.82 22.77
Days Inventory Outstanding 74.92 80.77 92.85 67.00 86.89
Days Cash Outstanding 155.32 126.81 144.39 124.93 141.11
Total Asset Turnover 0.67 0.70 0.70 0.91 0.76
Debt/Asset Ratio 0.47 0.49 0.48 0.48 0.47
Current Ratio 2.17 2.00 2.10 2.05 2.11
Return on Assets 1.3% 1.8% 2.8% 4.1% 5.1%
Return on Equity 2.5% 3.4% 5.5% 8.0% 9.9%
Annualized Revenue per Employee (SEK) 2,457,634 2,334,727 2,309,391 2,308,995 2,364,554
Annualized Revenue per Employee ($US) 346,207$ 309,094$ 317,680$ 340,877$ 349,079$
SEK to $ Conversion Rate 0.14087 0.13239 0.13756 0.14763 0.14763
Employee Count 86,537 87,413 88,060 90,261 91,546
SOURCE: TBR AND ERICSSON
TBR
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Telefon AB LM Ericsson 1Q11 Initial Response | Network Business Quarterly ©2011 Technology Business Research, Inc. 12
Balance Sheet ERICSSON
Consolidated Balance Sheet
(In $ Thousands)
FISCAL QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11
CALENDAR QUARTER 1Q10 2Q10 3Q10 4Q10 1Q11
ASSETS
Cash and Equivalents 10,967,434$ 8,948,240$ 10,478,495$ 12,865,955$ 12,259,490$
Inventories, Net 3,398,630 3,891,869 4,168,618 4,413,694 4,745,714
Accounts Receivable - Trade 8,831,845 9,185,880 7,955,232 9,024,179 8,949,626
Short-term Customer Financing 265,540 282,255 309,648 461,048 400,520
Other Receivables 2,233,212 2,307,425 2,573,060 2,531,264 2,914,954
Total Current Assets 25,696,660 24,615,670 25,485,053 29,296,140 29,270,305
Tangible Assets (P,P&E) 1,312,768 1,298,746 1,277,932 1,392,741 1,353,915
Intangible Assets 6,611,593 6,554,629 6,383,472 6,911,889 6,527,756
Equity in Associated Companies 1,589,859 1,535,194 1,386,467 1,447,217 1,278,771
Other Investments 33,809 35,216 37,967 32,331 35,284
Long-term Customer Financing 137,912 128,286 171,400 189,114 212,587
Deferred Tax Assets 2,072,198 2,125,257 1,954,452 1,880,363 1,932,477
Other Long-term Receivables 274,415 356,394 339,223 454,553 445,843
Total Non-current Assets 12,032,552 12,033,721 11,550,913 12,308,208 11,786,632
Total Assets 37,729,212 36,649,391 37,035,967 41,604,348 41,056,936
LIABILITIES AND EQUITY
Interest-bearing Liabilities 284,135 502,685 598,799 562,175 690,318
Accounts Payable 2,508,331 2,683,016 2,850,793 3,684,697 3,668,458
Other Current Liabilities 9,048,080 9,149,870 8,663,529 10,038,249 9,539,998
Total Current Liabilities 11,840,546 12,335,571 12,113,121 14,285,122 13,898,774
Pensions & Provisions 1,135,553 1,125,050 1,110,797 803,845 631,561
Long-term Liabilities 4,826,629 4,598,037 4,681,717 4,845,512 4,721,355
Total Liabilities 17,802,728 18,058,658 17,905,635 19,934,479 19,251,690
Minority Interest in Equity of Consolidated
Subsidiaries 163,832 280,005 230,275 247,871 230,303
Total Stockholders' Equity 19,762,652 18,310,729 18,900,056 21,421,999 21,574,943
Total Liabilities and Equity 37,729,212 36,649,391 37,035,967 41,604,348 41,056,936
FINANCIAL RATIOS
Days Sales Outstanding 125.08 130.17 109.62 87.63 103.01
Turns on Inventory 4.87 4.52 3.93 5.45 4.20
Fixed Asset Turnover (Tangible Assets) 19.07 20.06 19.89 26.82 22.77
Days Inventory Outstanding 74.92 80.77 92.85 67.00 86.89
Days Cash Outstanding 155.32 126.81 144.39 124.93 141.11
Total Asset Turnover 0.67 0.70 0.70 0.91 0.76
Debt/Asset Ratio 0.47 0.49 0.48 0.48 0.47
Current Ratio 2.17 2.00 2.10 2.05 2.11
Return on Assets 1.3% 1.8% 2.8% 4.1% 5.1%
Return on Equity 2.5% 3.4% 5.5% 8.0% 9.9%
Annualized Revenue per Employee ($US) 346,207$ 309,094$ 317,680$ 340,877$ 349,079$
Employee Count 86,537 87,413 88,060 90,261 91,546
SOURCE: TBR AND ERICSSON
TBR
TBR
T EC H N O LO G Y B U S I N ES S R ES EAR C H , I N C .
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