Fourth quarter report 2001 January 25, 2002 • Adjusted income before taxes of SEK -3.4 b. excluding additional risk provisions for Latin America of SEK 1.7 b. • Handset operations repositioned with licensing business and Sony Ericsson Mobile Communications • Targeting over 5% operating margin for full year 2002 through new business opportunities and ongoing cost control - Other operations Sales - Other operations Adjusted Operating Income 1) - Other operations Adjusted Operating Margin 1) - Other operations Adjusted Income Before Taxes 1) Earnings per share, diluted (SEK) Earnings per share, diluted per U.S. GAAP (SEK) Cash flow before financing activities Number of employees - Capital gain, Juniper - Non-operational capital gains - Pension refund - Restructuring charges Fourth quarter Twelve months Pro forma format: Sony Ericsson Mobile Communications are accounted for under the equity method and included in “Earnings from Joint Venture and Associated Companies.” The results of the phone activities retained by Ericsson are included in “Other Operations.”

OPERATIONAL RESULTS Net sales were SEK 58.5 b., representing a 25% increase from the third quarter 2001 and a 15% decline compared with the fourth quarter 2000. Adjusted operating income was SEK -4.1 b. including provisions of SEK 1.7 b. for increased customer credit risks in Latin America and a loss of SEK 0.7 b. from our share in Sony Ericsson Mobile Communications. Operating margin in Systems improved sequentially to 4% excluding the additional risk provisions. Through significant improvements in working capital we generated strong cash flow of SEK 16.4 b. and achieved our target of positive...

OPERATIONAL REVIEW Systems Orders and sales have gradually declined during the year, reflecting lower volumes and more competitive pricing for both mobile systems and multi-service networks. The Systems order backlog remains strong at 43% of annual sales, almost unchanged from 44% at the end of 2000. However, new order development is essential to secure our operational targets in 2002. The Systems operating margin remained at 1% with improvements in Mobile Systems offset by further deterioration in Multi-Service Networks. Excluding the increased risk provisions for Latin America, our Systems...

PHONES Our Phones business has been restructured with the establishment of the Sony Ericsson joint venture for mobile multi- media products and the formation of technology licensing businesses for mobile phone platforms and Bluetooth. With this, we have repositioned Ericsson to capitalize on the opportunities in the new handset market structure, which is shifting from a few complete suppliers to a chain of specialized companies. As previously announced, our 50% share of income from Sony Ericsson Mobile Communications is included in “Earnings from Joint Venture and Associated Companies.” The...

FINANCIAL REVIEW Income Income is reported in a “statutory” format and a “pro forma” format. Swedish GAAP is used for both, with only the presentation differing to facilitate comparability. There are no differences in the reported income between the two formats. In the pro forma version, the previous three quarters of 2001 as well as the fourth quarter and full year 2000 are restated. This is to show how the restructuring of our Consumer Products Division affects our reporting. Gross margin declined in the quarter as improved cost of sales only partially offset adverse effects of the decline...

During the quarter, our total gross customer financing exposure increased by SEK 4.5 b. to SEK 26.4 b. With two-thirds now off-balance sheet, our on-balance sheet financing is SEK 8.9 b., down from SEK 9.7 b. at the end of the third quarter. Net debt decreased from SEK 30.9 b. to SEK 12.9 b. in the quarter. Cash flow Cash flow before financing activities was positive by SEK 16.5 b. for the fourth quarter and by SEK 4.2 b. for the full year. The improvement in working capital was the primary cash generator. Our DSO (Days Sales Outstanding) was reduced to 88 days, a substantial improvement from...

OUTLOOK In the third quarter report, we stated that our sales of Mobile Systems during 2002 were expected to be at least in line with the market development of flat to down 10%. We also stated an objective of an operating margin over 5% for the full year, even if net sales decline as much as 10% compared to 2001. We maintain this outlook for full year 2002 with an operating loss in the first quarter and results improving over the year. We expect to generate positive operating cash flow for the full year. For the first quarter of 2002, we expect sales to be approximately SEK 40 b. with Mobile...

Annual Report The annual report will be distributed to shareholders and will be available at our head office at Telefonplan, Stockholm, by March 10, 2002. Annual General Meeting of shareholders The Annual General Meeting of shareholders will be held on Wednesday, March 27, 2002, in Stockholm Globe Arena. Accounting principles This report has been prepared in accordance with the Swedish Financial Accounting Standards Council’s recommendation RR 20, Interim Reports. The same accounting principles have been used as were used in our latest annual report. The following optional recommendations are...

FOR FURTHER INFORMATION PLEASE CONTACT Investors Gary Pinkham, Vice President, Investor Relations Phone: +46 8 719 00 00 E- mail: [email protected] Lars Jacobsson, Vice President, Financial Reporting and Analysis Phone: +46 8 719 9489, +46 70 519 9489 E- mail: [email protected] Maria Bernström, Director, Investor Relations Phone: +46 8 719 5340, +46 70 533 4750 E- mail: [email protected] Lotta Lundin, Manager, Investor Relations Phone: +44 20 701 61 032, +44 7887 628 707 E- mail: [email protected] Glenn Sapadin, Manager, Investor Relations Phone:...

ERICSSONCONSOLIDATED INCOME STATEMENTOct-Dec Jan-Dec SEK million Net sales Cost of sales Gross margin as percentage of net sales 27.1% 32.3% 28.6% 36.8% Gross margin after restructuring costs Research and development and other technical expenses Selling expenses Administrative expenses Operating expenses Operating expenses as percentage of net sales Other operating revenues Share in earnings of JV and assoc. companies Operating margin as percentage of net sales Financial income Financial expenses Income after financial items Minority interest in income before taxes -373 -460 -19% -1,176 -953...