1. Looking to the Future

2. Agenda Company Overview Sweden’s Economic Environment Ericsson’s Performance and Future Shift to Services Sony-Ericsson Joint Venture Q&A

3. Company Overview Started as a telegraph repair shop in 1876 and grew into the world’s leading maker of wireless telecom infrastructure equipment Present in over 140 countries Vallenberg family owns roughly 50% of market cap in Sweden Ericsson supplies 19 out of 20 top service providers worldwide

4. Sweden’s Macroeconomic Condition: Previous Years Credible, rule-based policy supported growth of 4% per annum (1998-2000) Riksbank’s inflation targeting regime; sound medium term fiscal framework Growth driven primarily by technology sector Sweden feels worldwide recession in 2001 – Telecom exports fell by one-third – A weak Krona helped mitigate export slowdown – Swedish economy exceeded Riksbank inflation target of 2%

5. Sweden’s Macroeconomic Condition: 2003 Krona has appreciated significantly – 30% against the Dollar – 20% against the Euro Domestic demand has increased – Increased consumer confidence – Domestic economy has stabilized Recently rejected adoption of Euro

6. Factors leading to poor performance: Recession – Large economies suffering economic slowdown resulted in slowdown in telecommunications demand – Ericsson’s customers ceased expansionary plans – Profits and sales have been dramatically decreasing since 2001 due to the slowing sales at the consumer level Saturated industry – Main markets (US, Europe) have become saturated, ex. Houston, Atlanta have reached saturation levels of 74% – Sales have been replacement phones rather then new contracts  slow growth  providers purchase less network equipment

7. Merrill Lynch Jun 2003 presentation

10. 3G: Ericsson’s Future Ericsson’s strategy assumes consumers will be quick to embrace new technologies 3G is the new wireless standard – Allows for high-speed voice, data and multi-media communications Worldwide 3G subscriptions expected to increase to 350 million by 2008

11. Ericsson: Reaching for the Future Major 3G rollout was delayed until 3 rd quarter, 2003 – Consistent negative cash flows and limited demand contributed to this delay Successful SEK29 billion stock issue improved companies financial position – Reduced debt to equity ratio

12. Ericsson: Reaching for the Future Cost cutting measures have been implemented to improve efficiency – Massive layoffs – Streamlining of R&D expenses Ericsson signed lucrative contracts that allowed it to be the exclusive provider of 3G in certain areas – Holds over 40 contracts to supply leading service providers with 3G technologies Expanded into Sri Lanka, China, Thailand, Lithuania in past few months

13. Diversifying Interests Ericsson is making a shirt towards providing services – Global Services Division becoming an ever-increasing part of Ericsson’s business Three major service areas: 1. Advisory Services 2. Integration Services 3. Managed and Support Services Global Services Division accounted for 30% of revenue in early 2003

14. Sony Ericsson Joint Venture 50/50 joint venture began in 2001 Ericsson wants to capitalize on Sony’s strengths in consumer electronics, design, retail, and digital content Sony sees advantages in Ericsson’s networking expertise and operator relationships

15. Sony Ericsson Joint Venture Venture was slow to see a profit for the first two years – Economic troubles and high capital outlays contributed to poor performance Venture’s recent performance has greatly improved – Improved operating results and strong increase in sales so far in 2003 – Profit expected to be reached in 4 th Quarter 2003 or early 2004 Long term venture that can endure early hardships

16. Overview Ericsson, like most telecom companies, suffered setbacks during the global recession New technologies and services have revitalized the company Slow-starting SonyEricsson joint venture is starting to realize profits

17. Questions?