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This chapter is covered by the Auditors' Report.

C3 Segment Information

Primary segments

Ericsson has the following business segments:

Networks delivers products and solutions for mobile and fixed broadband access, core networks and transmission as well as related network rollout services. The offering includes:

  • radio access solutions interconnect with devices such as mobile phones, notebooks and PCs, supporting different standardized mobile technologies, such as GSM and WCDMA on the same platform..
  • access solutions, recently expanded by acquisitions, increase the customers’ ability to modernize fixed networks to enable new IP-based services with higher bandwidth.
  • our core network solutions include industry-leading softswitches, IP infrastructure for EDGE- and core routing, IP Multimedia Subsystem (IMS) and media gateways.
  • transmission; microwave and optical transmission solutions for mobile and fixed networks.
  • related network rollout services

GSM and WCDMA share a common core network, preserving investments. IMS is a platform that enables converged services to be transparently provided indepent of the type of access used.

Professional Services delivers managed services, systems integration, consulting, education and general customer support services. The offering includes:

  • managed services comprise network operations (the managment of day-to-day operations of customer networks) and hosting of service layer platforms and applications
  • systems integration; Ericsson integrates equipment from multiple suppliers and handles technology change programs as well as design and integration of new solutions
  • consulting; experts in business and technology strategy provide support (decision making, planning and execution ) to customers in improving and growing their business.
  • education; tailored programs to ensure operator personnel have the right skills and competence to manage their increasingly complex systems.
  • customer support services; staff world-wide provide around-the-clock support and advice to ensure network uptime and performance.

Multimedia delivers enablers and applications that the operators need to deliver a rich user experience seamlessly on any device, any time and anywhere.

The offering includes:

  • TV solutions, end-to-end solutions for operators, service providers, advertisers and content providers.
  • customer and business applications; multimedia solutions for the consumer and enterprise markets.
  • multimedia brokering solutions which facilitate payment and distribution of content.
  • service delivering and provisioning platforms enabling operators and service providers to create, sell and manage multimedia offerings and multi-play offerings.
  • mobile platforms; platform technology for GSM/EDGE and WCDMA/HSPA used in mobile devices and PCs.

Phones, consisting of Ericsson’s investment and share in earnings of the Sony Ericsson Mobile Communications joint venture. Sony Ericsson delivers innovative and feature-rich mobile phones, accessories and PC-cards.

Secondary segments

Ericsson operates in five main geographical areas: (1) Western Europe, (2) Central and Eastern Europe, Middle East and Africa, (3) Asia Pacific, (4) North America and (5) Latin America. These areas represent the geographical segments.

Business segments (primary)
2008 Networks Professional
Services 		Multi
media 		Phones Unallo
cated 		Elimi
nations 		Group
Net sales 142,050 48,978 17,902 – – – 208,930
Inter-segment sales – – – – – – –
Total net sales 142,050 48,978 17,902 – – – 208,930
Share in earnings of JV and associated companies –25 92 –2 –503 – – –436
Operating income 11,145 6,346 –118 –503 –618 – 16,252
Operating margin (%) 8% 13% –1% – – – 8%
Financial income 3,458
Financial expenses –2,484
Income after financial items 17,226
Taxes –5,559
Net income 11,667
Assets 1) 2) 119,351 42,701 20,771 – 94,873 – 277,696
Equity in joint ventures and associated companies 852 322 120 6,694 – – 7,988
Total assets 120,203 43,023 20,891 6,694 94,873 – 285,684
Liabilities 3) 4) 58,739 25,868 5,363 – 53,630 – 143,600
1) Segment assets include property, plant and equipment, intangible assets, current and non-current customer finance, accounts receivable, inventory, prepaid expenses, accrued revenues, derivatives and other current assets.
2) Unallocated assets include mainly cash and cash equivalents, short-term investments and deferred tax assets.
3) Segment liabilities include accounts payable, provisions, accrued expenses and deferred revenues, advances from customers and other current liabilities
4) Unallocated liabilities include accrued interests, tax liabilities, interest-bearing liabilities and post-employment benefits.
Other segment items
Property, plant and equipment and intangible assets
Additions to property plant and equipment 3,085 735 257 – 56 – 4,133
Acquisitions/capitalization of intangible assets 693 11 583 – – – 1,287
Depreciation –2,347 –532 –228 – –1 – –3,108
Amortization –3,210 –368 –1,429 – 1 – –5,006
Impairment losses –547 – –19 – – – –566
Reversals of impairment losses 6 1 – – – – 7
Restructuring expenses –5,131 –1,272 –337 –846 –20 – –7,606
Gains/losses from divestments 9 –16 992 – 113 – 1,098
Geographical segments (secondary)
2008 Net sales Total assets Additions/capitalization of PP&E and
intangible assets
Western Europe 51,570 214,501 4,065
– of which Sweden 8,876 189,827 2,909
Central and Eastern Europe, Middle East and Africa 53,080 13,628 93
Asia Pacific 63,307 38,407 370
– of which China 15,068 13,937 140
– of which India 15,176 12,705 85
North America 17,925 8,164 739
– of which United States 14,132 7,761 697
Latin America 23,048 10,984 153
Total 208,930 285,684 5,420
– of which EU 57,601 222,401 4,101

For employee information, see Note C29, “Information Regarding Employees, Members of the Board of Directors and Management”.

Business segments (primary)
2007 Networks Professional
Services 		Multi
media 1) 		Phones Unallo
cated 		Elimi
nations 		Group
Net sales 128,985 42,892 15,903 – – – 187,780
Inter-segment sales 32 10 2 – – –44 0
Total net sales 129,017 42,902 15,905 – – –44 187,780
Share in earnings of JV and associated companies 61 66 –3 7,108 – – 7,232
Operating income 17,398 6,394 –135 7,108 –119 – 30,646
Operating margin (%) 13% 15% –1% – – – 16%
Financial income 1,778
Financial expenses –1,695
Income after financial items 30,729
Taxes –8,594
Net income 22,135
Assets 2) 3) 107,819 36,974 18,736 – 70,683 – 234,214
Equity in joint ventures and associated companies 850 298 206 9.549 – – 10,903
Total assets 180,669 37,272 18,945 9,549 70,682 – 245,117
Liabilities 4) 5) 58,739 25,868 5,363 – 53,630 – 143,600
1) Multimedia figures include the Enterprise PBX business which was divested in 2008.
2) Segment assets include property, plant and equipment, intangible assets, current and non-current customer finance, accounts receivable, inventory, prepaid expenses, accrued revenues, derivatives and other current assets.
3) Unallocated assets include mainly cash and cash equivalents, short-term investments and deferred tax assets.
4) Segment liabilities include accounts payable, provisions, accrued expenses and deferred revenues, advances from customers and other current liabilities.
5) Unallocated liabilities include accrued interests, tax liabilities, interest-bearing liabilities and post-employment benefits.
Other segment items
Property, plant and equipment and intangible assets
Additions to property plant and equipment 3,264 806 249 – – – 4,319
Acquisitions/capitalization of intangible assets 15,401 2,973 11,464 – – – 22,838
Depreciation –2,601 –367 –152 – –1 – –3,121
Amortization –4,630 –237 –566 – – – –5,433
Impairment losses –105 –1 – – – – –106
Reversals of impairment losses 297 – – – – – 297
Gains/losses from divestments – – – – 280 – 280
Geographical segments (secondary)
2007 Net sales Total assets Additions/capitalization of PP&E and
intangible assets
Western Europe 52,685 160,606 12,127
– of which Sweden 8,395 117,887 2,671
Central and Eastern Europe, Middle East and Africa 48,661 10,737 230
Asia Pacific 54,629 26,852 1,124
– of which China 13,598 9,915 704
– of which India 10,517 6,642 71
North America 13,422 32,815 20,528
– of which United States 10,529 31,573 17,668
Latin America 18,383 14,107 148
Total 187,780 245,117 34,157
– of which EU 58,978 161,251 10,609

For employee information, see Note C29, “Information Regarding Employees, Members of the Board of Directors and Management”.

Business segments (primary)
2006 1) Networks Professional
Services 		Multi
media 2) 		Phones Unallo
cated 		Elimi
nations 		Group
Net sales 127,518 36,813 13,877 – 1,613 – 179,821
Inter-segment sales 176 34 17 – 2 –229 0
Total net sales 127,694 36,847 13,894 – 1,615 –229 179,821
Share in earnings of JV and associated companies 18 21 43 5,852 – – 5,934
Operating income 21,722 5,309 714 5,852 2,231 7) – 35,826
Operating margin (%) 17% 13 5% – – – 20%
Financial income 1,954
Financial expenses –1,789
Income after financial items 35,993
Taxes –9,557
Net income 26,436
Assets 3) 4) 100,792 21,141 6,657 – 76,941 – 205,531
Equity in joint ventures and associated companies 918 170 280 8,041 – – 9,409
Total assets 101,710 21,311 6,937 8,041 76,941 – 214,940
Liabilities 5) 6) 42,837 17,718 4,011 – 29,479 – 94,045
1) Ericsson has reorganized its operating structure as of January 1, 2007. Comparative figures for 2006 are restated accordingly. For further details see note C1, Significant Accounting Policies.
2) Multimedia figures include the Enterprise PBX business which was divested in 2008.
3) Segment assets include property, plant and equipment, intangible assets, current and non-current customer finance, accounts receivable, inventory, prepaid expenses, accrued revenues, derivatives and other current assets.
4) Unallocated assets include mainly cash and cash equivalents, short-term investments and deferred tax assets.
5) Segment liabilities include accounts payable, provisions, accrued expenses and deferred revenues, advances from customers and other current liabilities.
6) Unallocated liabilities include accrued interests, tax liabilities, interest-bearing liabilities and post-employment benefits.
7) Unallocated operating income include the effect of the divesture of the Defense business by SEK 2,963 million.
Other segment items
Property, plant and equipment and intangible assets
Additions to property plant and equipment 3,462 291 74 – – – 3,827
Acquisitions/capitalization of intangible assets 16,403 1,512 404 – – – 18,319
Depreciation –2,689 –271 –47 – – – –3,107
Amortization –4,015 –116 –68 – –38 – –4,237
Impairment losses –303 – – – – – –303
Reversals of impairment losses 31 – – – – – 31
Restructuring expenses –2,400 –402 –106 – – – –2,908
Gains/losses from divestments – – – – 2,945 – 1,098
Geographical segments (secondary)
2006 Net sales 1) Total assets Additions/capitalization of PP&E and
intangible assets
Western Europe 53,182 158,773 20,704
– of which Sweden 7,809 125,578 17,819
Central and Eastern Europe, Middle East and Africa 46,413 8,139 147
Asia Pacific 47,884 24,853 419
– of which China 11,776 9,088 206
– of which India 7,359 5,936 39
North America 15,862 10,893 798
– of which United States 13,878 10,231 739
Latin America 16,480 12,282 78
Total 179,821 214,940 22,146
– of which EU 2) 58,983 160,074 20,763
1) Revenues from intellectual property rights (IPR) related to products are as from 2007 reported in Net sales with related costs reported as Cost of sales. Comparative figures for 2006 have been restated accordingly.
2) Restated for Bulgaria and Romania which entered into the European Union as from 2007.

For employee information, see Note C29, “Information Regarding Employees, Members of the Board of Directors and Management”.

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