Sony Ericsson (STO:ERIC) Reports Results For Fourth Quarter And Full Year 2008

Ericsson (STO:ERIC) Highlights:

* Global economic slowdown leads to contracting consumer demand * Previously announced annual Euro 300 million cost savings on track Initiated additional Euro 180 million annual cost savings * Joined the Open Handset Alliance and developing new phone using Android Open Source software * Successful rollout of Xperia(TM) X1, Cyber-shot(TM)C905 phones and PlayNow(TM) plus music service

London, UK - The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the fourth quarter and full year ended December 31, 2008 is as follows:

Q4 2008 Q3 2008 Q4 2007 FY 2008 FY 2007 Number of units shipped 24.2 25.7 30.8 96.6 103.4 (million) Sales (Euro m.) 2,914 2,808 3,771 11,244 12,916 Gross margin (%) 15% 22% 32% 22% 31% Operating income (Euro -262 -33 489 -113 1,544 m.) Operating margin (%) -9% -1% 13% -1% 12% Restructuring charges 129 35 - 175 - (Euro m.) Operating income excl. -133 2 489 61 1,544 restructuring charges (Euro m.) Operating margin excl. -5% 0% 13% 1% 12% restructuring charges (%) Income before taxes (IBT) -261 -23 501 -83 1,574 (Euro m.) IBT excl. -133 12 501 92 1,574 restructuring charges (Euro m.) Net income (Euro m.) -187 -25 373 -73 1,114

Average selling price 121 109 123 116 125 (Euro)

Units shipped in the quarter were 24.2 million, a sequential decrease of 6% and a year-on-year decrease of 21%. Sales for the quarter were Euro 2,914 million, an increase of 4% sequentially due to a positive impact of currency fluctuations, and a decrease of 23% compared to Q4 2007. The decline in sales year-on-year was driven by lower volumes, due to the global economic slowdown that resulted in contracting consumer demand and decreased availability of credit.

Gross margin became 15% due to negative impact from exchange rate fluctuations, restructuring charges and material write-offs.

Foreign exchange fluctuations had a positive impact on sales in total, but a large negative impact on costs of goods sold (ie. costs increased) sequentially, as well as year-on-year.

Income before taxes for the quarter was Euro -133 million, excluding restructuring charges of Euro 129 million, compared to the profit of Euro 501 million in Q4 2007. Despite a negative result in the quarter, Sony Ericsson maintained a healthy balance sheet with a strong, net cash position of Euro 1,072 million.

The average selling price (ASP) for Sony Ericsson in Q4 2008 was Euro 121, an increase sequentially but a decrease year-on-year. The sequential increase of ASP was due to a positive impact of foreign exchange rate fluctuations and to the sale of a higher proportion of high-end models. Estimated market share for Q4 2008 is maintained at around 8%.

"In economic terms, 2008 has been a tumultuous year with world markets experiencing a serious downturn. The mobile phone market has been greatly affected by this and as expected, the fourth quarter continued to be very challenging for Sony Ericsson. Our business alignment is progressing as planned, with the full effect of annual savings of around Euro 300 million expected by the second half of 2009. We foresee a continued deterioration in the market place in 2009, particularly in the first half," said Dick Komiyama, President, Sony Ericsson.

The additional cost saving measures initiated by Sony Ericsson are aimed at reducing operating expenses by a further Euro 180 million annually, with the full effect expected at the end of 2009. Sony Ericsson currently estimates that the cost for the additional restructuring activities will be covered by the previously announced Euro 300 million restructuring charges.

In Q4 2008, the successful roll out of the Xperia(TM) X1 and Cyber-shot(TM)C905; Sony Ericsson's first eight mega pixel phone as well as the PlayNow(TM) plus music service positively impacted the business. In the same quarter, Sony Ericsson announced that it joined the Open Handset Alliance and is currently developing a new phone that uses the Android Open Source software.

Earlier in 2008, Sony Ericsson announced that it became a founding member of the Symbian Foundation; an initiative will create an open mobile software platform based on Symbian OS.

Sony Ericsson estimates the 2008 global handset market as being around 1,190 million units or around 6% growth from 2007, compared to the company's previous forecast of around 10%. Sony Ericsson forecasts that the global handset market will contract in 2009 and that the industry ASP will continue to decline.

Cyber-shot(TM) is a trademark of the Sony Corporation. The Liquid Identity logo, Xperia(TM) and the Xperia(TM) logo and PlayNow(TM)plus are trademarks or registered trademarks of Sony Ericsson Mobile Communications AB. Sony is a trademark or registered trademark of Sony Corporation. Ericsson is the trademark or registered trademark of Telefonaktiebolaget LM Ericsson. Other product and company names mentioned herein may be the trademarks of their respective owners. Any rights not expressly granted herein are reserved. Subject to change without prior notice.

EDITOR'S NOTES: Financial statements: Consolidated income statement Consolidated income statement full year Consolidated income statement isolated quarters Consolidated balance sheet Consolidated statement of cash flows Consolidated statement of cash flows full year Consolidated statement of cash flows isolated quarters

Additional information: Net sales by market area, by quarter

- ENDS -

Sony Ericsson is a top, global industry player with sales of around 97 million phones in 2008. Diversity is one of the core strengths of the company, with operations in over 80 countries including manufacturing in China and R&D sites in China, Europe, India, Japan and North America. Sony Ericsson was established as a 50:50 joint venture by Sony and Ericsson in October 2001, with global corporate functions located in London. For more information about Sony Ericsson please visit www.sonyericsson.com

CONTACTS:

Investors / Analysts Ericsson Investor Relations Gary Pinkham (Stockholm) +46 10 719 0858 Susanne Andersson (Stockholm) + 46 10 719 4631

Sony Investor Relations

Shinji Tomita (London) +44 20 7426 8696 Gen Tsuchikawa (Tokyo) +81 3 6748 2180

Press / Media Sony Ericsson Global Communications and PR Aldo Liguori (London) +44 20 8762 5860 Merran Wrigley (London) +44 20 8762 5862 Simone Bresi-Ando (London) +44 20 8762 5863

This press release contains forward-looking statements that involve inherent risks and uncertainties. We have identified certain important factors that may cause actual results to differ materially from those contained in such forward-looking statements. For a detailed description of risk factors, see Sony's and Ericsson's filings with the US Securities and Exchange Commission, particularly each company's latest published Annual Report on Form 20-F.

Sony Ericsson CONSOLIDATED INCOME STATEMENT

Oct-Dec EUR million 2008 2007 Change

Net sales 2,914 3,771 -23% Cost of sales -2,476 -2,573 -4% Gross profit 438 1,198 -63% Gross margin % 15.0% 31.8% -17%

Research and development expenses -359 -349 3% Selling and administrative expenses -366 -375 -2% Operating expenses -725 -724 0%

Other operating income, net 24 15 62% Operating income -262 489 -154% Operating margin % -9.0% 13.0% -22%

Financial income 28 19 47% Financial expenses -27 -7 287% Income after financial items -261 501 -152%

Taxes 81 -118 -169% Minority interest -7 -10 -28% Net income -187 373 -150%

Number of units shipped (million) 24.2 30.8 -21% ASP (EUR) 121 123 -2%



EUR Million Oct-Dec Restructuring charges 2008 Cost of sales 67 Research and development expenses 35 Sales and administrative expenses 24 Other operating income, net 3 Total 129



Sony Ericsson CONSOLIDATED INCOME STATEMENT

Jan-Dec EUR million 2008 2007 Change

Net sales 11,244 12,916 -13% Cost of sales -8,750 -8,958 -2% Gross profit 2,494 3,958 -37% Gross margin % 22.2% 30.6% -8%

Research and development expenses -1,379 -1,173 18% Selling and administrative expenses -1,249 -1,260 -1% Operating expenses -2,628 -2,432 8%

Other operating income, net 21 18 19% Operating income -113 1,544 -107% Operating margin % -1.0% 11.9% -13%

Financial income 101 62 64% Financial expenses -71 -32 122% Income after financial items -83 1,574 -105%

Taxes 31 -423 -107% Minority interest -21 -36 -42% Net income -73 1,114 -107%

Number of units shipped (million) 96.6 103.4 -7% ASP (EUR) 116 125 -7%



EUR Million Jan-Dec Restructuring charges 2008 Cost of sales 75 Research and development expenses 62 Sales and administrative expenses 29 Other operating income, net 9 Total 175



Sony Ericsson CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS

2008 2007 EUR million Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

Net sales 2,914 2,808 2,820 2,702 3,771 3,108 3,112 2,925 Cost of sales -2,476 -2,192 -2,168 -1,914 -2,573 -2,154 -2,192 -2,039 Gross profit 438 616 653 788 1,198 954 921 886 Gross margin % 15.0% 21.9% 23.1% 29.2% 31.8% 30.7% 29.6% 30.3%

Research and development expenses -359 -337 -344 -339 -349 -280 -283 -261 Selling and administrative expenses -366 -303 -310 -270 -375 -280 -321 -284 Operating expenses -725 -640 -653 -610 -724 -560 -604 -545

Other operating income, net 24 -8 -2 6 15 -1 -2 5 Operating income -262 -33 -2 184 489 393 315 346 Operating margin % -9.0% -1.2% -0.1% 6.8% 13.0% 12.7% 10.1% 11.8%

Financial income 28 25 25 24 19 7 18 18 Financial expenses -27 -15 -14 -15 -7 -16 -6 -2 Income after financial items -261 -23 8 193 501 384 327 362

Taxes 81 6 0 -57 -118 -109 -97 -100 Minority interest -7 -8 -3 -3 -10 -8 -10 -9 Net income -187 -25 6 133 373 267 220 254

Number of units shipped (million) 24.2 25.7 24.4 22.3 30.8 25.9 24.9 21.8 ASP (EUR) 121 109 116 121 123 120 125 134



EUR Million 2008 * Restructuring charges Q4 Q3 Q2 Cost of sales 67 0 8 Research and development expenses 35 26 2 Sales and administrative expenses 24 3 1 Other operating income, net 3 6 0 Total 129 35 11



* Restructuring charges were not incurred in the first quarter of 2008.

Sony Ericsson CONSOLIDATED BALANCE SHEET

Dec 31 Sep 30 Jun 30 Dec 31 EUR million 2008 2008 2008 2007

ASSETS

Total fixed and financial assets 590 649 590 572

Current assets Inventories 531 717 538 437 Accounts receivables 1,629 1,815 1,905 1,870 Other assets 585 527 511 345 Other short-term cash investments 707 918 966 1,431 Cash and bank 418 555 624 724 Total current assets 3,870 4,532 4,544 4,808

Total assets 4,460 5,180 5,134 5,380

SHAREHOLDERS' EQUITY AND LIABILITIES

Shareholders' equity 1,217 1,429 1,684 2,026 Minority interest 57 50 35 64 Total equity 1,274 1,480 1,719 2,090

Total long-term liabilities 30 39 25 26

Accounts payable 990 1,453 1,436 1,263 Other current liabilities 2,166 2,208 1,954 2,001 Total current liabilities 3,156 3,661 3,390 3,264

Total shareholders' equity and liabilities 4,460 5,180 5,134 5,380

Net cash* 1,072 1,374 1,591 2,155

* Net cash is defined as cash and bank plus short-term cash investments less interest bearing liabilities.



Sony Ericsson CONSOLIDATED STATEMENT OF CASH FLOWS

Oct-Dec EUR million 2008 2007

OPERATIONS Net income -187 373 Adjustments to reconcile net income to cash 37 17 -150 390

Changes in operating net assets -168 44 Cash flow from operating activities -318 434

INVESTMENTS Investing activities 41 -27 Cash flow from investing activities 41 -27

FINANCING Financing activities -46 0 Cash flow from financing activities -46 0

Net change in cash -323 408 Cash, beginning of period 1,473 1,758 Translation difference in Cash -25 -10 Cash, end of period 1,125 2,155



Sony Ericsson CONSOLIDATED STATEMENT OF CASH FLOWS

Jan-Dec EUR million 2008 2007

OPERATIONS Net income -73 1,114 Adjustments to reconcile net income to cash 146 107 73 1,221

Changes in operating net assets -323 -305 Cash flow from operating activities -250 916

INVESTMENTS Investing activities -64 -164 Cash flow from investing activities -64 -164

FINANCING Financing activities -754 -849 Cash flow from financing activities -754 -849

Net change in cash -1,068 -97 Cash, beginning of period 2,155 2,273 Translation difference in Cash 37 -21 Cash, end of period 1,125 2,155



Sony Ericsson CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS

2008 2007 EUR million Oct-Dec Jul-Sep Apr-Jun Jan-Mar Oct-Dec Jul-Sep Apr-Jun Jan-Mar

OPERATIONS Net income -187 -25 6 133 373 267 220 254 Adjustments to reconcile net income to cash 37 39 40 31 17 32 30 28 -150 15 46 164 390 299 250 282

Changes in operating net assets -168 88 -142 -101 44 88 16 -454 Cash flow from operating activities -318 102 -96 64 434 387 266 -172

INVESTMENTS Investing activities 41 -55 -29 -22 -27 -53 -31 -53 Cash flow from investing activities 41 -55 -29 -22 -27 -53 -31 -53

FINANCING Financing activities -46 -238 -8 -462 0 -300 -548 -1 Cash flow from financing activities -46 -238 -8 -462 0 -300 -548 -1

Net change in cash -323 -191 -133 -421 408 34 -312 -226 Cash, beginning of period 1,473 1,591 1,711 2,155 1,758 1,730 2,045 2,273 Translation difference in Cash -25 74 13 -24 -10 -6 -3 -2 Cash, end of period 1,125 1,473 1,591 1,711 2,155 1,758 1,730 2,045


Sony Ericsson NET SALES BY MARKET AREA BY QUARTER

EUR million 2008 2007 Isolated quarters Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Europe, Middle East & Africa * 1,642 1,427 1,386 1,494 2,251 1,715 1,729 1,598 Americas 636 703 740 486 636 573 499 365 Asia 636 678 694 722 884 820 885 961 Total 2,914 2,808 2,820 2,702 3,771 3,108 3,112 2,925 * of which Western Europe 1,117 947 900 979 1,569 1,103 1,102 1,078

2008 2007 Sequential change (%) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Europe, Middle East & Africa * 15% 3% -7% -34% 31% -1% 8% -26% Americas -10% -5% 52% -24% 11% 15% 37% -34% Asia -6% -2% -4% -18% 8% -7% -8% -11% Total 4% 0% 4% -28% 21% 0% 6% -23% * of which Western Europe 18% 5% -8% -38% 42% 0% 2% -27%

2008 2007 Year over year change (%) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Europe, Middle East & Africa * -27% -17% -20% -7% 5% 7% 59% 55% Americas 0% 23% 48% 33% 15% 37% 52% 46% Asia -28% -17% -21% -25% -18% -8% 4% 35% Total -23% -10% -9% -8% 0% 7% 37% 47% * of which Western Europe -29% -14% -18% -9% 6% -1% 47% 60%

2008 2007 Year to date 0812 0809 0806 0803 0712 0709 0706 0703 Europe, Middle East & Africa * 5,966 4,324 2,879 1,494 7,293 5,042 3,328 1,598 Americas 2,566 1,930 1,226 486 2,072 1,436 864 365 Asia 2,712 2,076 1,416 722 3,550 2,666 1,846 961 Total 11,244 8,330 5,522 2,702 12,916 9,145 6,037 2,925 * of which Western Europe 3,943 2,826 1,879 979 4,852 3,283 2,179 1,078

2008 2007 YTD year over year change (%) 0812 0809 0806 0803 0712 0709 0706 0703 Europe, Middle East & Africa * -18% -14% -13% -7% 24% 36% 57% 55% Americas 24% 34% 42% 33% 34% 44% 49% 46% Asia -24% -22% -23% -25% 0% 8% 18% 35% Total -13% -9% -9% -8% 18% 27% 42% 47% * of which Western Europe -19% -14% -14% -9% 21% 29% 53% 60%



The full report (including tables) can be downloaded from the following link:

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LINK: http://hugin.info/1061/R/1282700/287034.pdf

Ericsson

http://www.ericsson.com/

ISIN: SE0000108656

Stock Identifier: XOME.ERIC

US: NASDAQ:ERICY