Interim Results

    ]>

Ericsson's restructuring well on track for the return to
profitability

Second quarter summary
*         Net sales SEK 27.6 b. - book-to-bill above 1 for second
  consecutive quarter
*         Net income SEK -2.7 b. - adjusted income after fin SEK -0.2
  b.
*         Earnings per share SEK -0.17
*         Operating expense run rate SEK 42 b. - down SEK 5 b.
  sequentially
*          Cash flow before financing SEK 5.1 b. - significantly
  strengthened financial position



                                      Second quarter    First quarter
SEK b.                             2003     2002 Change   2003 Change
Orders booked, net                   28.3   35.3   -20%   27.1     5%
Net sales                            27.6   38.5   -28%   25.9     7%
Adjusted gross margin (%)           35.1%  32.5%      -  34.1%      -
Adjusted operating income            -0.2   -2.5      -   -3.4      -
Adjusted income after
financial items                      -0.2   -3.1      -   -3.5      -
Net income                           -2.7   -2.7      -   -4.3      -
Earnings per share                  -0.17  -0.25      -  -0.27      -
Cash flow before financing
activities                            5.1   -2.0      -    0.7      -
Opex run rate, annualized              42     57   -26%     47   -11%
Number of employees                57,644 76,221   -24% 60,940    -5%



Book-to-bill was above one for the second consecutive quarter with
order bookings increasing by 5% sequentially to SEK 28.3 (35.3) b.
Net sales in the second quarter grew 7% sequentially to SEK 27.6
(38.5) b. Foreign currency exchange rate differences have had a
negative effect of 9% year-over-year.

Adjusted gross margin improved sequentially by one percentage point
to 35.1% (32.5%) as a result of ongoing restructuring. Operating
expense reductions are well on track, reaching an annualized run-rate
of SEK 42 (57) b. Adjusted income after financial items was SEK -0.2
(-3.1) b. compared to SEK -3.5 b. in the first quarter. Foreign
currency exchange rate differences have had a negative effect of SEK
0.5 b. year-over-year.

Cash flow before financing was SEK 5.1 (-2.0) b. with major
contributions from reductions in working capital and customer
financing. The financial position continues to strengthen with a net
of financial assets and liabilities of SEK 11 b. Payment readiness
remains high at SEK 68.8 (33.5) b.

CEO COMMENTS

"We remain determined to return to profit during 2003. Over eight
quarters we have more than halved our operating expenses and are
approaching our earlier announced cost targets. I am impressed with
how our employees are carrying out this dramatic downsizing in the
middle of the ongoing launches of new technology. We are encouraged
by a third quarter of positive cash flow and a strengthened financial
position," says Carl-Henric Svanberg, President and CEO of Ericsson.

"But we are not satisfied. We see clear potential for further gross
margin improvements and by establishing operational excellence we
will secure the profitability and cost advantages attainable by the
market leader.

Our customers are increasing their focus on end-user benefits and on
financial performance. Through development of operational excellence
we will secure faster deliveries and quicker response to changing
needs.

In the longer-term perspective I remain confident in the market
opportunities. The number of subscribers continues to grow, they also
talk more and are increasing their use of data services including
broadband. Frequent users of data services spend more minutes on
voice as well, making such services important to attract and retain
the high volume users. This, along with the introduction of more
mobile data optimized handsets and new applications, will drive the
need for capacity expansion.

Our 2G GSM business is sound with the second consecutive quarter of
increased order intake, and, as we approach one million WCDMA
subscribers, 3G is now starting to become a commercial reality for
the operators. We have supplied equipment for seven of the nine
commercially launched 3G networks. In addition, we have supplied the
world's first commercial EDGE network, launched by Cingular Wireless.
We are clearly in the forefront of both 2G and 3G mobile systems.

The market for professional services continues to develop in our
favor. We have the industry's strongest service portfolio built on
our large installed base, unique know-how, local presence and proven
ability to integrate and manage networks with equipment from multiple
vendors," concludes Carl-Henric Svanberg, President and CEO of
Ericsson.

MARKET VIEW

The number of mobile subscribers continues to grow on pace to exceed
1.5 billion subscribers within three years. We expect between 165 and
180 million net additions this year with approximately 44 million
during the second quarter. In addition, traffic is expected to
further grow as operators promote mobile internet and mobile
multimedia services.

We expect the market to remain weak in the near term. Operators
continue to reduce debt maintaining a cautious view on capital
expenditure. We are, however, encouraged by the quick improvement of
their overall debt situation.

OUTLOOK

We maintain our view that the global mobile systems market, measured
in USD, could decline by more than 10% this year compared with 2002.
We also maintain our view that the addressable market for
professional services should continue to show good growth.

We expect to maintain our shares of the mobile systems and
professional services markets this year. Due to foreign exchange
effects, our reported sales in SEK will decline more than the overall
market, which is estimated in USD.

Sales for the third quarter are expected to be flat or slightly down
on a sequential basis.

OPERATIONAL REALIGNMENT

Restructuring activities lowered the annualized operating expense run
rate to SEK 42 (57) b., a sequential reduction of SEK 5 b. The
restructuring also contributed to an improvement of the adjusted
gross margin to 35.1% (32.5%) from 34.1% in the first quarter,
already within our targets for 2003.

Total restructuring charges were SEK 3.8 b. during the quarter. SEK
2.0 b. relates to previously announced reductions, which are now
finalized. SEK 1.5 b. relates to the actions announced in the first
quarter. Estimated total restructuring costs for 2003 remain at
SEK 16.3 b.

Cash outlays in the quarter were SEK 2.4 b. Total estimated cash
outlays for 2003 is estimated to SEK 15 b. and SEK 5 b. for 2004.

During the quarter a contract to outsource the information technology
infrastructure to HP was signed as well as a Memorandum of
Understanding with IBM to outsource the development, implementation
and maintenance of IT-applications. Approximately 2,000 employees
will be transferred as a result of these agreements during the coming
year.

During the quarter, headcount was reduced by 3,300, bringing the
workforce to 57,600 (76,200) by the end of June. Total number of
employees will be reduced to approximately 52,000 by year-end and
will reach 47,000 during 2004.

CONSOLIDATED ACCOUNTS

FINANCIAL REVIEW

Income
In the second quarter, both orders and sales increased compared to
the first quarter with a book-to-bill ratio above 1.0 for the second
consecutive quarter.

Orders booked grew 5% sequentially to SEK 28.3 (35.3) b. A 15%
increase in Mobile Networks orders was partially offset by lower
orders in other areas. Orders declined year-over-year by 20%,
approximately half of which was attributable to foreign currency
exchange rates, mainly a weaker USD.

Orders in Asia Pacific increased strongly from the first quarter due
to large orders in China, Japan and Australia. Good order development
in Eastern Europe, Middle East and Africa more than compensated for
weaker order intake in Western Europe. In the Americas, the North
American market was flat sequentially in spite of the weakening USD
while Latin America showed a decline.

Sales grew 7% sequentially to SEK 27.6 (38.5) b. but declined 28%
year-over-year. Approximately one third of the year-over-year decline
is related to the weakening USD. Sales in Asia Pacific were flat,
with increases in China and Australia offset by lower sales in Japan.
Sales in all other regions increased sequentially.

Gross margin adjusted for restructuring improved for the second
consecutive quarter to 35.1% (32.5%), a sequential increase of one
percentage point from 34.1%. The continued cost reductions and
improved capacity utilization offset the effects of price pressure,
product mix and the weaker USD.

Adjusted operating expenses were reduced SEK 1.3 b. sequentially to
SEK 10.1 (14.5) b. The annualized run-rate was SEK 42 (57) b., down
from SEK 47 b. in the first quarter. Operating expenses include a net
favorable impact from customer financing of SEK 0.3 b., mainly
related to released risk provisions from the sold France Telecom
perpetual convertible bonds.

Adjusted operating income was SEK -0.2 (-2.5) b. compared to SEK -3.4
b. the previous quarter. Adjusted income after financial items was
SEK -0.2 (-3.1) b. compared to
SEK -3.5 b. in the first quarter. Net effects of changes in foreign
currency exchange rates on operating income compared to rates one
year ago were SEK -0.5 b. Excluding effects from currency hedging
contracts this net effect would have been SEK -1.1 b.

A positive adjusted income in Systems of SEK 0.6 b. was offset by a
negative result in Other Operations of SEK -0.3 b., SEK -0.2 b. from
Sony Ericsson Mobile Communications, and SEK -0.2 b. of unallocated
costs.

Net income was SEK -2.7 (-2.7) b. for the quarter and earnings per
share was SEK -0.17
(-0.25).

Balance sheet and financing
Working capital was reduced by SEK 4.2 b. to SEK 65.3 (69.6) b. in
the quarter. The reduction is mainly attributable to trade
receivables and inventory. Days sales outstanding (DSO) for trade
receivables were 101 (108), a decrease by eight days sequentially.
Inventory turnover was more than 5.3 (4.2) turns.

Customer financing risk exposure was reduced by approximately 40% to
SEK 11.8 (27.8) b. in the quarter. This includes sales of the France
Telecom bonds and other credits, closed in the quarter but due for
payment of SEK 5 b. in the third quarter. The total on-balance sheet
receivables were reduced by SEK 5.5 b. Unutilized credit commitments
were reduced to SEK 11 (25.3) b.

In the quarter a total of SEK 10 b. were repaid for the convertible
bond loan to employees (SEK 4.5 b.) and other borrowings. Through the
positive cash flow before financing activities of SEK 5.1 b. net debt
improved to SEK -11 (22) b. The equity ratio was 36.0% (28.6%)
compared to 34.9% at the end of the previous quarter.

Cash flow
Cash flow before financing activities was positive for the third
consecutive quarter and amounted to SEK 5.1 (-2.0) b. This was
primarily a result of reductions in working capital in trade
receivables, inventory and customer financing, which more than
compensated for the SEK -2.7 b. net loss for the period.

Cash flow from investing activities was SEK 0.6 b. Customer financing
contributed SEK 3.0 b. Cash flow related to restructuring activities
was approximately SEK -2.4 b.

Payment readiness remained high at SEK 68.8 (33.5) b. For the
remainder of the year, repayments of approximately SEK 2.3 b. of
long-term maturities are planned.

SEGMENT RESULTS

SYSTEMS

                               Second quarter  First quarter
SEK b.                        2003 2002 Change  2003 Change
Orders booked
Mobile Networks               20.0 22.9   -13%  17.5     15%
Fixed Networks                 1.7  3.0   -42%   2.0    -13%
Professional Services          4.6  5.3   -14%   5.5    -17%
Net sales
Mobile Networks               18.9 27.0   -30%  17.6      7%
Fixed Networks                 2.2  3.0   -27%   1.9     15%
Professional Services          4.1  4.8   -15%   4.4     -7%
Adjusted operating income      0.6 -0.7      -  -2.1       -
Adjusted operating margin (%)   2%  -2%      -   -9%       -


Systems orders increased 5% sequentially to SEK 26.3 (31.2) b.,
including a 3% negative impact of a lower USD. Mobile Networks
increased by 15%, driven by orders for GSM and WCDMA. Recurring
service business develops according to plan. However, the inflow of
additional Professional Services contracts was lower compared to the
first quarter. Overall demand for Fixed Networks remains relatively
weak.

Systems sales increased 5% sequentially to SEK 25.2 (34.8) b., even
with a lower USD. The GSM/WCDMA track increased by 10% sequentially,
down 13% year-over-year. Sales of WCDMA equipment and associated
network rollout services represented 13% of Mobile Network sales.
Total Systems sales were affected by the phase-out of older
standards.

Sales of Professional Services were SEK 4.1 (4.8) b. in the quarter,
including negative effects of foreign currency exchange rates.
Year-to-date growth amount to 4% excluding foreign currency exchange
effects.

Adjusted operating income was SEK 0.6 (-0.7) b.

OTHER OPERATIONS


                                 Second quarter  First quarter
SEK b.                          2003 2002 Change  2003 Change
Orders booked                    2.3  4.8   -52%   2.6    -11%
Orders booked less divestitures  2.3  3.2   -28%   2.6    -11%
Net sales                        2.5  4.6   -44%   2.4      7%
Net sales less divestitures      2.5  3.0   -16%   2.4      7%
Adjusted operating income       -0.3 -1.0      -  -0.5       -
Adjusted operating income
less divestitures               -0.3 -0.5      -  -0.5       -
Adjusted operating margin (%)   -13% -21%      -  -21%       -
Adjusted operating margin
less divestitures (%)           -13% -17%      -  -21%       -


Other Operations has been restructured, including divestitures, which
is reflected in the year-over-year figures with an approximate volume
reduction of 50%. Sequentially orders declined 11% and sales
increased by 7%.

Adjusted operating income in the quarter improved year-over-year as
well as sequentially.

PHONES

The operating results of Sony Ericsson Mobile Communications (SEMC)
improved significantly in the quarter and Ericsson's share in
earnings before restructuring charges of SEK 0.3 b. was SEK -0.2
(-0.4) b., compared to SEK -0.5 b. in the first quarter. This
improvement was due to increased volumes and higher average selling
prices. Year-over-year, GSM unit shipments increased 84% and
shipments to the Japanese market increased 45% reflecting the
successful introduction of new models.

SEMC has decided to increase its focus on GSM and Japanese standards
and to exit the American CDMA handset standard. In addition, a
research and development unit in Germany will be closed down. The
company expects restructuring charges of EUR 70 m. of which EUR 58 m.
in the second quarter. The restructuring activities are projected to
generate yearly run-rate savings of approximately EUR 120 m. when
completed, with some benefit in the second half of 2003. SEMC expects
to be profitable in the second half of 2003.

RELATED PARTY TRANSACTIONS

Sony Ericsson Mobile Communications (SEMC)

SEK m.                Second quarter 2003 Second quarter 2002
Sales to SEMC                         934               1,315
Royalty from SEMC                     154                 168
Purchases from SEMC                   488               1,156

Receivables from SEMC                 155                 292
Liabilities to SEMC                   616                 323


Parent Company information

The Parent Company business consists mainly of corporate management
and holding company functions. It also includes activities performed
on a commission basis by Ericsson Treasury Services AB and Ericsson
Credit AB regarding internal banking and customer credit management.
The Parent Company has branch and representative offices in 16 (16)
countries.

Net sales for the six months period amounted to SEK 0.9 (0.8) b. and
income after financial items was SEK 2.8 (1.1) b.

Major changes in the company's financial position for the six months
period were:

*         Increased current and long-term commercial and financial
  receivables from subsidiaries of SEK 22.6 b.
*         Decreased current other receivables of SEK 2.8 b.
*         Decreased cash and short-term cash investments of SEK 2.1
  b.

The investments were primarily financed through increased internal
borrowings of SEK 24.6 b. During the second quarter repayments of
current maturities of long-term loans amounted to SEK 8.7 b. At the
end of the quarter, cash and short-term cash investments amounted to
SEK 57.2 (59.3) b. Customer financing credits, including France
Telecom perpetual convertible bonds, were sold in the quarter with
payments of SEK 5 b. to be received in the third quarter.

As per July 1, 2003 test plant lease agreements between the Parent
Company and subsidiaries have been transferred to the subsidiary
Ericsson Test Environments AB.

In the second quarter, as decided at the Annual General Meeting, a
stock issue and a subsequent stock repurchase was carried out related
to the 2003 employee Stock Purchase Plan. 158 million of Ericsson
Class C shares were issued and later repurchased as treasury stock.
These shares have been converted to Ericsson Class B shares. The
stock issue increased the capital stock in restricted stockholders
equity by SEK 158 m. and the repurchase reduced non-restricted equity
by SEK 158 m.

In accordance with the conditions of the 2001 Stock Purchase Plan for
Ericsson employees, 918,200 shares from treasury stock were
distributed during the second quarter to employees who left Ericsson.
An additional 94,300 shares were sold during the second quarter in
order to cover social security costs related to the Stock Purchase
Plan. The holding of treasury stock at June 30, 2003, was 309,552,865
Class B shares.

Stockholm, July 18, 2003

Carl-Henric Svanberg

President and CEO

Date for next report: October 30, 2003

Auditors' Report

We have reviewed the report for the six-month period ended June 30,
2003, for Telefonaktiebolaget LM Ericsson (publ.). We conducted our
review in accordance with the recommendation issued by FAR. A review
is limited primarily to enquiries of company personnel and analytical
procedures applied to financial data and thus provide less assurance
than an audit. We have not performed an audit and, accordingly, we do
not express an audit opinion.
Based on our review, nothing has come to our attention that causes us
to believe that the second quarter report does not comply with the
requirements for interim reports in the Annual Accounts Act.

Stockholm, July 18, 2003


Carl-Eric Bohlin            Bo Hjalmarsson             Thomas Thiel
Authorized Public           Authorized Public          Authorized
Accountant                  Accountant                 Public
                                                       Accountant
PricewaterhouseCoopers AB   PricewaterhouseCoopers AB


Safe Harbor Statement of Ericsson under the Private Securities
Litigation Reform Act of 1995;
All statements made or incorporated by reference in this release,
other than statements or characterizations of historical facts, are
forward-looking statements. These forward-looking statements are
based on our current expectations, estimates and projections about
our industry, management's beliefs and certain assumptions made by
us. Forward-looking statements can often be identified by words such
as "anticipates", "expects", "intends", "plans", "predicts",
"believes", "seeks", "estimates", "may", "will", "should", "would",
"potential", "continue", and variations or negatives of these words,
and include, among others, statements regarding: (i) strategies,
outlook and growth prospects; (ii) positioning to deliver future
plans and to realize potential for future growth; (iii) liquidity and
capital resources and expenditure, and our credit ratings; (iv)
growth in demand for our products and services; (v) our joint venture
activities; (vi) economic outlook and industry trends; (vii)
developments of our markets; (viii) the impact of regulatory
initiatives; (ix) research and development expenditures; (x) the
strength of our competitors; (xi) future cost savings; and (xii)
plans to launch new products and services.
In addition, any statements that refer to expectations, projections
or other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking statements.
These forward-looking statements speak only as of the date hereof and
are based upon the information available to us at this time. Such
information is subject to change, and we will not necessarily inform
you of such changes. These statements are not guarantees of future
performance and are subject to risks, uncertainties and assumptions
that are difficult to predict. Therefore, our actual results could
differ materially and adversely from those expressed in any
forward-looking statements as a result of various factors. Important
factors that may cause such a difference for Ericsson include, but
are not limited to: (i) material adverse changes in the markets in
which we operate or in global economic conditions; (ii) increased
product and price competition; (iii) further reductions in capital
expenditure by network operators; (iv) the cost of technological
innovation and increased expenditure to improve quality of service;
(v) significant changes in market share for our principal products
and services; (vi) foreign exchange rate fluctuations; and (vii) the
successful implementation of our business and operational
initiatives.

A glossary of all technical terms is available at:
http://www.ericsson.com/about and in the Annual Report.

To read the full report, please go to:
http://www.ericsson.com/investors/6month03-en.pdf

Full report can also be downloaded from following link:
http://reports.huginonline.com/911193/120421.pdf

FOR FURTHER INFORMATION PLEASE CONTACT

Henry Sténson, Senior Vice President, Communications
Phone: [phone]; E-mail: [e-mail]


Investors

Gary Pinkham, Vice President, Investor Relations
Phone: [phone]; E-mail: [e-mail]

Lotta Lundin, Investor Relations
Phone: [phone]; E-mail: [e-mail]

Glenn Sapadin, Investor Relations
Phone: [phone]; E-mail: [e-mail]

Lars Jacobsson, Vice President, Financial Reporting and Analysis
Phone: [phone]; E-mail:
[e-mail]


Media

Pia Gideon, Vice President, Market and External Communications
Phone: [phone]; E-mail:
[e-mail]

Åse Lindskog, Director, Media Relations
Phone: [phone]; E-mail:
[e-mail]

Ola Rembe, Director, Media Relations
Phone: [phone]; E-mail:
[e-mail]

FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION

Financial Statements      Page

Consolidated income statement                   10
Consolidated balance sheet                      11
Consolidated statement of cash flows            12
Consolidated stockholders' equity               13
Consolidated income statement isolated quarters 14



Additional Information       Page

Accounting policies and reporting                15
Orders booked by segment by quarter              16
Net sales by segment by quarter                  17
Adjusted operating income, operating margin and
employees by segment by quarter                  18
Orders booked by market area by quarter          19
Net sales by market area by quarter              20
External orders booked by market area by segment 21
External net sales by market area by segment     21
Top ten markets in orders and sales              22
Customer financing risk exposure                 22
Other information                                23



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