STOCKHOLM, Dec. 8, 2017Restated segment financials

As announced in April 2017, Ericsson (NASDAQ: ERIC) will start to report financials according to its new segments as of the fourth quarter 2017. To facilitate year-on-year comparisons, Ericsson today discloses the restated financials for full year 2015, each quarter of 2016 and the three first quarters of 2017.

The four segments reported are:

Networks – Radio and transport solutions with supporting services, based on industry standards and offered via scalable modular platforms. The portfolio enables customers to evolve their telecom networks across generations to 5G – including new use cases, such as, public safety, IoT, and fixed wireless access.

Digital Services – Products and services providing solutions for our customers' digital transformation journeys across the support systems BSS and OSS, Telecom Core, and IT Cloud domains through a combination of products, technology and expertise in networks, software, cloud, and business processes.

Managed Services – Services are offered in three main areas: Networks, IT, and Network Design & Optimization. Managed services for networks range from hands-on field service operations to remote network operations. IT managed services include the management of applications and data centers, while network design & optimization services evolve and expand customer networks to meet ever-changing demands from consumers and business users.

Other – Products and services that enable content owners, broadcasters, TV service providers and network operators to efficiently deliver, manage and monetize new TV experiences. In addition, segment Other includes iconectiv and emerging business such as Internet of Things and Unified Delivery Network (UDN).

Financial disclosures for each segment remain the same as earlier and include:

  •  Net Sales
  •  Gross income and gross margin
  •  Operating income and operating margin
  •  EBITA and EBITA margin
  •  Restructuring charges

Net Sales for segments Networks and Digital Services include a breakdown of sales into products, services and IPR licensing revenues. The split of IPR licensing revenues will be 82% to Networks and 18% to Digital Services.

There is no change in the geographical structure. Net sales will continue to be reported in five geographic Market Areas and Market Area Other.

Overview of restated financials:

Net sales SEK million

2017 Q1 – Q3

2016

2015

 

Networks

91,781

140,984

157,791

 

Digital Services

28,116

45,298

49,443

 

Managed Services

18,309

27,501

30,597

 

Other

5,898

8,825

9,089

 

Total

144,104

222,608

246,920

 

Operating income, reported SEK million

2017 Q1 – Q3

2016

2015

 

Networks

6,017

17,570

28,290

 

Digital Services

-15,232

-6,663

-3,389

 

Managed Services

-2,972

-507

-19

 

Other

-6,183

-4,101

-3,077

 

Total

-18,370

6,299

21,805

 

Operating income, adjusted* SEK million

2017 Q1 – Q3

2016

2015

 

Networks

12,992

20,983

31,055

 

Digital Services

-6,854

-3,487

-1,514

 

Managed Services

-752

-125

219

 

Other

-4,052

-3,505

-2,915

 

Total

1,334

13,866

26,845

 

* The numbers exclude restructuring charges and are adjusted for certain other items affecting comparability in 2017

Goodwill and acquisition-related intangible assets

Goodwill and acquisition-related intangible assets amounted to approximately SEK 45 b. in the balance sheet per Q3 2017. In the previous segment structure, SEK 24.7 b. is related to Networks, SEK 11.6 b. to IT & Cloud, and SEK 8.6 b. to Other.

As the restatement of the profit and loss accounts per segment is now finalized, Ericsson is together with the auditors starting the process to allocate goodwill and intangibles to segments. Thereafter the required impairment testing will be conducted, based on the strategy and business plans presented at the Capital Markets Day on November 8, 2017. The impairment test outcome will be announced shortly after the Q4 closing, before the Q4 earnings report.

A preliminary indication is that impairment may be required in segments Digital Services and Other, but not in segments Networks or Managed Services. An impairment would not impact cash flow but operating income and equity. Also, an impairment is not an indication of the performance of the business in the quarter. Our gross and net cash positions are strong, and will not be impacted by a potential impairment.

Find the complete tables of restated financials at www.ericsson.com/investors.

CONFERENCE CALL FOR ANALYSTS, INVESTORS, AND JOURNALISTS

A conference call for financial analysts, investors and journalists will begin at 15:00 CET on December 8.

CFO Carl Mellander will comment on the restated financials and take questions. To join the conference call, please call one of the following numbers:

SE Toll Number: +46(0)856642662 (Toll-Free Sweden: 0200883817)

International/UK Toll Number: +44-2030089801 (Toll-Free UK: 08082370059)

US Toll Number: +1-6465025116 (Toll-Free US: +1-8557532235)

Please call in at least 15 minutes before the conference call begins. As there is usually a large number of callers, it may take some time before you are connected.

A live audio webcast of the conference call will be available at: www.ericsson.com/investors   and at: www.ericsson.com/press 

REPLAY:

A replay of the conference call will be available from about one hour after it has ended until December 15, 2017.

Sweden replay number: +46-8-5664-2638

International replay number: +44-20-3426-2807

Conference Number: 693556#

Contacts investors and financial analysts:

Peter Nyquist, Head of Investor Relations
Phone: +46-10-714-64-99
E-mail: [email protected]

Åsa Konnbjer, Director, Investor Relations
Phone: +46-10-713-39-28
E-mail: [email protected]

Stefan Jelvin, Director, Investor Relations
Phone: +46-10-714-20-39
E-mail: [email protected]

Rikard Tunedal, Director, Investor Relations
Phone: +46-10-714-54-00
E-mail: [email protected]

Contacts media enquiries:

Peter Olofsson, Head of Corporate Communications
Phone: +46-10-719-18-80
E-mail: [email protected]

Corporate Communications
Phone: +46-10-719-69-92
E-mail: [email protected]

Ericsson is a world leader in communications technology and services with headquarters in Stockholm, Sweden. Our organization consists of more than 111,000 experts who provide customers in 180 countries with innovative solutions and services. Together we are building a more connected future where anyone and any industry is empowered to reach their full potential. Net sales in 2016 were SEK 222.6 billion (USD 24.5 billion). The Ericsson stock is listed on Nasdaq Stockholm and on NASDAQ in New York. Read more on www.ericsson.com.

This information is information that Telefonaktiebolaget LM Ericsson is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08:30 CET on December 8, 2017.

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SOURCE Ericsson

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