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View Annual Report ANNUAL REPORT 2007 ERICSSON ANNUAL REPORT 2007 EVERY MOMENT Counts Printed on Amber Graphic and Holmen Ideal Volume – chlorine free paper that meets international environmental standards Telefonaktiebolaget LM Ericsson EN/LZT 108 9753 R1A SE-164 83 Stockholm, Sweden ISSN 1100-8962 www.ericsson.com © Telefonaktiebolaget LM Ericsson 2008 Stockholm, Sweden Alfa Indah, Sumatra, Indonesia Singapore Connecting with friends Delivering an order received via mobile phone Keeping in touch with relatives in New York Glossary 2G EDGE IMS Managed services First digital generation of Third generation mobile standard, (IP Multimedia Subsystem) Outsourcing of the management mobile systems, includes GSM, developed as an enhancement of A standard for offering voice and of operator networks and/or hosting TDMA, PDC and cdmaOne. GSM. Enables the transmission of multimedia services over mobile of their services. data at speeds up to 250 kbps. and fixed networks using Internet 3G technology (IP). Packet switching 3rd generation mobile system, Emerging market A method of switching data in a includes WCDMA/HSPA, EDGE, Defined as a country that has a GNP IP network where individual packets CDMA2000 and TD-SCDMA. per capita index below the World (Internet Protocol) Defines how are accepted by the network and Bank average and a mobile subscrip- information travels between network delivered to their destinations. All-IP tion pene tration below 60 percent. elements across the Internet. The method is used by the Internet A single, common IP infrastructure and will replace traditional circuit that can handle all network services, GPON IPTV switching. including fixed and mobile communi- (Gigabit Passive Optical Network) (IP Television) A technology that cations, for voice and data services Used for fiber-optic communication to delivers digital television via fixed Penetration Annual Report 2007 and also video services such as TV. the home (FTTH). broadband access. The number of subscriptions divided by the population in a ARPU GPRS IPX geographical area. 1 Operational Review Average Revenue Per User. (General Packet Radio Service) (Internet Payment eXchange) A packet-switched technology that The global payment and messaging Softswitch 25 Letter from the Chairman Broadband enables GSM networks to handle delivery solution for SMS, MMS, A software-based system for handling Data speeds that are high enough mobile data communications at rates Web and WAP. call management functionality. Inte- to allow transmission of multimedia up to 115 kbps, for instance Internet grates IP-telephony and the legacy 26 Board of Directors' Report* services with good quality. connections. Generally referred to LTE circuit-switched part of the network. as 2.5G. (Long-Term Evolution) The term for Consolidated Financial Statements* 45 Centrex solutions the next evolutionary step of mobile Uplink Centrex is a telephony service for enter- HSPA technology beyond today’s HSPA = from your device, e.g. to the 49 Notes to the Consolidated Financial Statements* prises, delivered by a service provider. (High Speed Packet Access) networks. Internet. Enhancement of 3G/WCDMA that en- 105 Risk Factors* Downlink ables mobile broadband. A subscriber Main-remote concept WCDMA = to your device. can download files to a 3G mobile A split radio base station, with radio (Wideband Code Division Multiple device at speeds of several Mbps. units at the top of the mast, near Access) A 3G mobile communica- Parent Company Financial Statements* 111 DSL access antennas. tion system that uses code division Digital Subscriber Line technologies multiple access technology over a 116 Notes to the Parent Company Financial Statements* for broadband multimedia com- wide frequency band. WCDMA builds munications in fixed line telephone on the same core network infrastruc- 134 Auditors' Report networks. Examples: IP-DSL, ADSL ture as GSM. and VDSL. 135 Share Information Uncertainties in the Future 140 Shareholder Information Some of the information provided in this material is or may contain forward-looking information such as statements about expectations, assumptions about future market conditions, projec- tions or other characterizations of future events. The words “believe”, “expect”, “anticipate”, “intend”, “may”, “plan”, the negative of such terms, and similar expressions are intended to identif y these statements. Although we believe that the expectations reflected in these and other forward-looking statements are reasonable, we can give no assurance that these expectations will 141 Remuneration prove to be correct and actual results may differ materially. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law or stock exchange regulation. We advise you that Ericsson is subject to risks both specific to our industry and specific to our company 145 Information on the Company that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, changing conditions in the telecom- munications industry, political economic and regulatory developments in our markets, our management’s ability to develop and execute a successful strategy, various financial risks such Annual publications 155 Forward-looking Statements as interest rate changes and exchange rate changes, erosion of our market position, structure and financial strength of our customer base, our credit ratings, product development risks, supply constraints, and our ability to recruit and retain quality staff. The Ericsson Annual Report describes Ericsson’s financial and operational performance during 156 Corporate Governance Report 2007 2007. This publication includes a Corporate Governance Report. Project Management Ericsson Investor Relations The Ericsson Summary Annual Report is an extract of the full Annual Report. We issue a separate 176 Financial Terminology and Glossary Design and production Publicis Stockholm and Paues Media Corporate Responsibility Report. Our website www.ericsson.com is updated on a regular WHERE YOU CAN FIND OUT MORE Photography Andreas Lind, Felix Oppenheim (p.8-9), Marcel Pabst (p.19), Lars Nybom (p.23-24) basis and contains information about the Company, including downloadable versions of each of Our website: www.ericsson.com Reprographics TBK the above reports. * Chapters covered by the Auditors' Report Our share: www.ericsson.com/investors Printing Elanders, Falköping Kuala Lumpur, Malaysia Portland, Oregon, USA Milan, Italy Checking the account balance Broadcasting live on the Internet Sharing a goal with friends across the world Every moment counts Freeze any moment in time. Anywhere They are talking, working, keeping in the world. No matter where you look, in touch, exchanging ideas, buying, you will find people taking advantage selling, checking news, downloading of telecommunications: at home, on city information, watching videos. No streets, in remote locations, at work, matter what they are doing, it’s a new, in transit. natural part of their lives. In many ways, Ericsson is at the heart of this. Our technology and services make these moments possible. 1.6 million new subscriptions per day The number of GSM/WCDMA subscriptions around the world increased by 1.6 million per day in 2007. Source: Informa EVERY MOMENT COUNTS 1 net sales (SEK billion) 187.8 179.8 153.2 The Ericsson advantage 132.0 117.7 2003 2004 2005 2006 2007 OUR 10 largest marKets 2007 percent of total sales Ericsson provides communication investments by creating, securing, protecting and China 7 licensing our portfolio of patents in support of our USA 6 networks, professional services business goals. India 6 and multimedia solutions to the Italy 5 world's largest and most demanding Operational Excellence Spain 5 Simple, efficient and effective processes that consis- operators and service providers. Sweden 4 tently yield high-quality products and services with low UK 4 We are also engaged in bringing tele- cost of ownership provide competitive advantage. Indonesia 3 communication to benefit people in In this way we help our customers become as suc- cessful as they possibly can. Operational excellence, Japan 3 developing areas of the world. Brazil 3 combined with our core values of professionalism, Long-term dedication to our customers respect and perseverance, is instrumental to our The essence of the telecommunication business ways of working. is long-term and trusted relationships between vendors and operators. With records of service A exceeding a century in almost every market in the 52.7 -1 % world, Ericsson has some of the strongest operator E 13.4 relationships in the industry. Simply put, operators -15% 48.7 know what they get when they choose to work with D 18.4 B THE ERicssoN VisioN +12% +5% Ericsson – a trusted partner committed to making 54.6 them as successful as they can possibly be. +14% Our vision is to be the prime driver in an all- C Technical superiority communicating world. A world in which all For more than 130 years, Ericsson’s commitment people can use voice, text, images and video SALES BY REGION 2007 Ericsson net sales (SEK billion) to research and development has been at the heart to share ideas and information whenever and and change (%) year-over-year of the Company’s vision to provide the means for wherever they want. As the leading supplier A Western Europe people everywhere to communicate. In addition to of communication
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