Gary Pinkham - Head of IR Carl-Henric Svanberg - President and CEO Karl-Henrik Sundström - CFO

Glenn Dills- Charter Equity Research Peter Dionisio - Morgan Stanley John Bucher - BMO Capital Markets Gareth Jenkins - Deutsche Bank Tim Boddy - Goldman Sachs Richard Kramer - Arete Research Matthew Hoffman - Cowen James Faucette - Pacific Crest Securities Alexandre Peterc - Exane/BNP Paribas James Crawshaw - Blue Oak Capital

Good day ladies and gentlemen and welcome to today's analyst and media conference call. For your information, this conference is being recorded. At this time, I would like to hand the call over to your host today, Mr. Gary Pinkham. Please go ahead, sir.

Thank you, operator. Hi, this is Gary, Head of Investor Relations here at Ericsson. With me here in Stockholm is Ericsson's CEO, Carl-Henric Svanberg and Karl-Henrik Sundström, our Chief Financial Officer. Before we get started, we will be making forward-looking statements during the call today. These statements are based on our current expectations and certain timing assumptions. As you know, the actual results may be different due to a number of risks and uncertainties associated with these timing assumptions. So, therefore we urge you to consider any forward-looking statements that we make with caution. With that out of the way, I'd like to turn it over to Carl-Henric for comments about our performance and plans going forward.

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IR firm sponsors transcript of micro-cap company: Consulting company sponsors company's transcript in sector of interest: Your company's name and promotion could have been on this transcript! Learn more, or email Zack Miller for details. Carl-Henric Svanberg: Well, hello everyone. Let me take you through Q4 and last year and how we see business as of now. First of all, it was an exciting year. We had sales increase of 17% with a profit to a record of SEK 36 billion. Services was up 30% and we are now running networks with 100 million subscribers, actually a 100 networks. It was a breakthrough year for HSPA. There was a lot of focus on all-IP and on multimedia. And in that context, we strengthened our position through the Marconi acquisition, that was also successfully integrated and we did acquire Redback. And to this we should add the record performance by Sony Ericsson. So all in all, I would say an encouraging year. If we then look at HSPA, this was truly a breakthrough year for HSPA. We have today 70 operators in the world that have rolled out 100 networks with a total of 100 million wideband CDMA subscribers. Our position is strong and we have been the lead or the sole supplier to the large operators that are driving this industry; Cingular, E-mobile, Hutch, MTN, Softbank, Telstra, Vodafone, and others. And our position in this field is a clear leadership. We are ahead in technology. We have also the best performing networks in terms of quality and stability, and we have also a leading market share. If you see where these networks have been employed, we are today covering the whole of Europe, North America, Canada, Australia, Japan, parts of Africa and Middle East. And within a couple of years, I guess we will see more or less the rest also been covered. We have also an ecosystem in place today with some 130 devices in some 50 phones. So, there are a lot of alternatives in the marketplace, and we can see that prices are now coming also down to affordability for the many people. We have some examples here of data cards including the latest one that will soon be in the market for Vodafone at 7.2 megabits per second. If we then go to all-IP networks, this is also an area of a lot of focus, where we will see triple play offerings to a larger degree in the marketplace. We see both a combination of more and more capable networks being rolled out, but also multimedia services that drives the demand for bandwidth and capacity. And if you, for example, look at IPTV solutions, they certainly drive a lot of capacity needs and quality needs. The intelligent routers are clearly in focus here. It is the EDGE routers that will be tomorrow's switches. So, in telephony, they obviously play an important role. Telecom grade is here important. We are used to at times call IP technology a best effort, and as long as we send mails and so on all free, it doesn’t really matter so much if we have a delay of 10 or 100 milliseconds. But as soon as we go into interactive TV or Voice-over-IP or so, we really seriously drive telecom grade standards. This is also why we acquired Redback, if we can go to the next slide. And that was closed actually on the 25th of January. Due to some new legislation, we could go even faster at closing it and it was probably the fastest takeover of a listed company in US so far. That gives us a considerable strengthened offering an all-IP solutions, and we also have some 700 very qualified engineers -- R&D engineers right at the heart of the routers capabilities in Silicon Valley. It is also giving us a stronger position versus the fixed line operators. Of course in US, where Redback has their headquarters, but also globally. And they are well positioned in large number of wireline companies around the world. If we then go to the financial highlights; we had sales of SEK 53.7 billion in the quarter, which is 18% up and an expected strong finish. For the full year, we were reaching close to SEK 178 billion, which was 17% up in a combination of growing with, of course, market-driven goals, but we have also taken a considerable market share and we have basically been growing twice the pace of the market in mobile systems. And then, of course, we added also the acquired Marconi assets. Professional Services ended up at SEK 32.3, which means that they grew 30% and it's encouraging also that two thirds of the revenue is now recurring. We continue to take market share there as well, and we today announced the takeover of the operations for Orange, which is France Telecom in Poland, which is an interesting opportunity for us. It’s a breakthrough with France Telecom. And, it's also in a market where we already are running two other networks. If we then look at our sales growth from 2003 to 2006 has been -- we have a compounded average growth rate there at 15%, with 17% this year. We've also added growth if we also include Sony Ericsson's the 50% that we own in Sony Ericsson. And as Sony Ericsson -- as you all notice is performing very well and they are becoming a bigger and more important part of what we do. We will include them more and talk more about their opportunities and their performance. If we look at the gross margin, we came in at 41.8%, full-year at 42.2%. This is around 4% lower than a year ago, where 1.5% is the effect of the strongly growing services, where services have lower gross margin but also lower overhead expenditures, so they end up with the good bottom line. It is equally 1.5% from the Marconi product where we have completed the restructuring when it comes to the overheads in the administration, but we can still reach more effect in the supply chain as we have said before and that we'll -- we keep working on that throughout the year. Operating margin came in at 22.7%, which means that we are full year at 20.1% but with an increasing trend throughout the year as we have got effects from Marconi restructuring and from the service contract. If we look at the operating income on the next slide, we have an operating income at 12.2, reaching 35.8 for the full year. The cash flow of SEK 9 billion for the quarter, reaching SEK 12 billion for the full year, and I will comment on that more in a second on the next slide. Earnings per share ended up at SEK 0.61 with SEK 1.65 for the full year, ahead of the most expectations because of the lower tax rate in the fourth quarter, which among other effect came from loss carryforward -- forwards with Sony Ericsson in Japan. That leaves us with a net cash position at SEK 40.7. If we just say a few words on the cash flow here, if we start up with our net income after tax of SEK 26 billion; we had an increase of SEK 14 billion for the full year. All other effect basically evened out, which led to a cash flow of SEK 12 billion. If we look at the inventory first, there we had a growth of SEK 2 billion, which corresponds to a 12% inventory growth. Inventory here is factory inventories to a smaller extent, but larger extent it is product in the field, ongoing work during installation. In total inventories grew by 12%, whereas sales was up 17%. So, we continue to rationalize till you can see that work in the field increased by 20%, reflecting that we have a higher proportion of larger and longer project. If we then look at the next slide, then we look at receivables. There we had -- where we had sales growth of 17% as you know, receivables grew by SEK 10 billion. Seven of this billion comes from the 17% growth, basically increasing with a growing company. SEK 3 billion is the effect of the market mix, where we had slowing, declining sales in Latin America and North America and strongly growing sales in Asia and CEEMEA countries Africa, Middle East. And we are growing in countries and regions where payment conditions are -- the payment terms are longer, so all of that is a mathematical effect. So all in all, I think, we can conclude that we had a good cash flow actually. We didn’t reach all the way to Karl's and my ambition to get another SEK 2 billion of cash flow, which was because we actually ended up with Asia and African sales even stronger in the Q4 than we had expected, but as America did not come in as strong as expected. So, that was the reason for that. If we then have -- go through the regional updates. We ended up with growth in Europe of 35% in the quarter and 24% for the year as a whole. And I think this is a typical picture as we may very well see it, of course, here is added Marconi sales. But this is the region where we have a lot of focus on multimedia and a lot of focus on the OpEx and therefore on managed services. And today it's in our fair list is just one example. But it's a high activity, and lot of discussions around managed services contracts, and everybody wants to make sure that they can get a fair share of the savings here. But it's also a lot of focus on multimedia offers now that there are much stronger, that more capable networks there and a lot of handsets are available -- attractive handset. If we then look at the CEEMEA region, with 22% to 23% growth for the quarter and the full year, and basically inline with what you also saw back in 2005. A lot of growth, especially in Africa and Middle East and it's exciting to see how we penetrate deeper-and-deeper into Africa and the importance of telephony that are brought until to the different rural villages. Still, one should remember that the penetration is low, so there is a lot of growth potential here. Voice is the main driver, but we mustn't forget the demand for mobile internet. It means even more for people in these regions than it does to us that have access to a fixed broadband or Internet, whether we are at offices or at home, but these are out in villages and in the field while this is their only means of communication. If we then go to Asia-Pacific region that ended up stronger than I guess we expected at the beginning of the year, 42% for the full year, a diverse region with lot of different growth drivers. Countries like Bangladesh, Indonesia, India is growing strongly. India is actually adding more subscribers now than China does and have had several months at the end of the year with 6 million new subscribers per month. At the same time, we have Japan, where we have big rollouts and where Japan really has the lead in mobile broadband. We’re also seeing a -- pent-up capacity demand in China for two -- pent-up 2G demand, as we are waiting for 3G licenses and we may very well not see the licenses before year-end, but still we expect China to be pretty busier now with 2G expansions. We have Latin America, where we saw a decline in full year of 14%, basically as a reaction of the very strong growth a year before, but the strong subscriber growth continues. We saw 60 million new subscribers only in the fourth quarter and to those of you that travel in Latin America, I think you do experience that the scale, capacity, and coverage just means that there are obvious. We've also seen the first HSPA contract launched with Entel in Chile. And we will see more of this in Latin America in 2007. We have also concluded from our side the first phase of the Vivo’s GSM migration and that was done on time. It’s an incredibly hectic rollout. If we then go to US, finally, we saw a decline of 18% for the full year, basically a reaction of the strong growth in 2005. Lot of folks in the marketplace on triple play and fiber-to-the-home are still seeing what's going to happen here on AT&T's rollout with EPON following Verizon's, and I guess AT&T has been waiting for their launch approval and get the decisions made following that. We have also the recent spectrum auctions that we talked about last time that creates more market potential. We have also -- on Ericsson side, we concluded here during the (inaudible) under the first phase of T-Mobile's HSPA rollout, and that was done in record time when we launched in New York. If we look at the five regions in one year and see how we see the temperature right now, we see Western Europe continue much as we have seen in 2006, not so strong growth yet on mobile infrastructure, very substantial outside, as we start to see traffic growth now from both lower tariffs and from multimedia services. But, of course, a lot of services focus in the other. CEMA region, not much to add to the comments I made, same growth potential, same things happening there. Asia Pacific will also be a bit busy region and as a combination of different growth drivers in different parts of the region, including sometimes top demand in China. Latin America should show a bit of recovery after last year's decline. And North America is somewhat hard to predict, but we expect more of a flattish outlook for mobile systems, as there are opportunities from triple play and fiber-to-the-home. We have a couple of comments here to make on Sony Ericsson. This is all known, so I will be brief here, but 75 million phones sold in 2006 was a record, of course. 60 million of the phones have the music capabilities and 20 million of the phones were camera equipped. And especially encouraging, of course, to see their 20% market share in UMTS in the second half of 2006. Their whole strategy has been based on what they call the Wow products and is strongly supported also by the Cyber-shot brand and the Walkman brand, and this have also given them strength to get a price premium, also seen in the various sub-segments in the entry part of the market. So, a strong momentum in Sony Ericsson and we will continue there -- we expect them to continue to do well here. If we look more at the numbers, Q4 sales were up 64%, which was actually slightly more than units, which means that they actually had a higher, increasing ASP. If we look at their profits for the fourth quarter, they added 2.2 billion to all operating income and 6 billion for the full year, so all in all a strong growth in Europe, Latin America, and Asia Pacific. Then when we come to the market outlook, we foresee very much a similar growth for 2007, as we've seen for 2006. When we conclude the growth rate for 2006, we can see that the market was growing around 5% versus our estimate of around 6. But more importantly, we can also conclude that we are growing market share faster than I believe most of us have expected. We can also see how the weaker players are losing faster than we expected. So, we look forward to an exciting year in 2007, where we continue to take market share. We can also see that we are taking market share in professional services, where the outlook remains at good growth, but I think you all have seen and followed the interest for services and for managed services. So that concludes my presentation and I will hand over Karl Sundström to add a couple of financial remarks. Karl-Henrik Sundström: Yes. Good afternoon. Good morning, ladies and gentleman. This is Karl-Henrik Sundström speaking. So, if you go to the first slide, the financial summary; that is basically describing the journey that Carl-Henric made in his brief presentation on the financial situation. And you'll see that we started with the first quarter with operating margin of 16.9. That was the effect of the acquisition of Marconi, but also of the two big managed services contracts that were signed during 2005. Then during the year, we have quarter-by-quarter improved the profitability by ending up with an operating margin of 22.7%. This has been supported by a strong growth in the profitability of Sony Ericsson, but also by profit improvement for Ericsson. And you also see that this year there has been a little bit of a shift between Q3 and Q4. We had a more pronounced seasonality in the fourth quarter. And then, if you go to the next slide please. I would only like to highlight a couple of things. We had a tax rate in the fourth quarter of 19%, and the main contributor to the very low tax rate were the revaluation of some loss carry forwards in Japan, but also that the rest of Ericsson came in a little bit lower. But the total effect of the revaluation of the loss provisions in Japan is basically 1% on the tax rate for the Ericsson Group as a whole. So, we ended up for the whole on a tax rate of 27, instead of what we had previously estimated to be somewhere between 28 and 30. And also, I would like to highlight as a planning assumption for 2007, a 30% tax rate is appropriate. Thank you. Next slide please. This is a slide describing what Ericsson has performed since 2003, all the way up to 2006. And as you can see, the description of the mathematical effect between 2004 and 2005 compared to today of 2006 is the 1.5% effect of the growth in services and a 1.5% growth with the addition of Marconi product portfolio that was acquired during the year. If we then go to the next slide please. On this one, I only wanted to highlight what Carl-Henric already had done. We had an increase of working capital for the reasons that Carl-Henric explained of SEK 14 billion. Net cash position moved from 60.6 at the end of 2005 to 40.7 in 2006. The reason for it is, we had an underlying cash flow of 12. We acquired Marconi for 17.6. We acquired Netwise for 0.3. We sold off our defense business in the third for 3.1. And then, we made a 7.1 dividend during the year. And that is a reconciliation of coming to the 40.7 in net cash at the end of 2006. If we then move into the next slide, which is describing the cash flow for the fourth quarter of 2006, I would like to highlight here that, as Carl-Henric showed, we had a good run in reducing the inventories in the fourth quarter. We actually -- in this quarter alone we had an inventory turnover of 5.4. We also managed to collect a customer financing or we got prepayment of customer financing SEK 1.2 billion. But as Carl-Henric described, we ended up with slightly higher accounts receivable, mainly because of the shift in the fourth quarter of sales between America, and Asia Pacific, and Middle East and Africa. Payables, provisions and other working capital had a negative impact of 0.1. Here I would like to point out that we consumed with cash SEK 3.5 billion of provisions related 0.9 to restructuring charges, and the other related to project, ending up with a cash flow of 8.9 in the fourth quarter. Next slide please. We collected SEK 50 billion in the fourth quarter, and with that we managed to change the DSO days from September of 105 to 86. This is still 5 days less than the year before, and those five days represents SEK 3 billion, which is actually the same SEK 3 billion that Carl-Henric showed. Inventory for the year ended at 5.1, even through we had a very strong turnover in the fourth quarter of 5.4, and payables came in at 54. As we talked before about the targets for 2007, I would like to say that the DSO days will not change that target. We are evaluating the inventory depending on the mix of what we are going to bill during 2007. However, no big changes are foreseen, and then we'll probably make sure that our partners are part of the success for the growth of Ericsson. Thank you.

With that, operator, we are ready to start the Q&A session.

Thank you. The question-and-answer session will be conducted electronically. (Operator Instructions). We'll take our first question today from [Glenn Dills] from Charter Equity Research. Please go ahead. Glenn Dills- Charter Equity Research: Thank you very much. (inaudible).

Mr. Dills, your line is open if you wish to ask a question.

Next question operator.

We will move to our next question from Peter Dionisio - Morgan Stanley. Please go ahead. Peter Dionisio - Morgan Stanley: Thanks. Just a couple of questions please. The first one is that, in terms of your market outlook for 2007, could you just tell us what changed over the past three months that's led to you change your view for the market from your previous moderate outlook to the around 5% market growth rate that you see for 2007? And then, just a clarification question, in Q4, where you already to achieve the SEK 2.2 billion in cost savings run-rate, is that you were expecting from the Marconi restructuring? Thank you. Carl-Henric Svanberg: For the last one, yes, we did. Because that was the cost for the laid off 1600 people, so that is clear. When it comes to the market outlook, we said in Q3 that we saw a moderate growth, similar to 2006, that we had commented on that we were at the lower end of that range. Our own estimate was that we were -- that the market was growing at some 6%. When we are now gathering the various players reported date that we can conclude that the growth rate in 2006 was probably more 5% and 6%, then we see the same conditions for 2007. So, we see no change in business climb between 2006 and 2007, it's more 1% difference in how we estimated it. Peter Dionisio - Morgan Stanley: And could you care to comment about, how you think Q1 will pan out in terms of your sequential decline in terms of group revenues, Q1 versus Q4 of 2006? Carl-Henric Svanberg: If you look at -- throughout the years, you have a pretty good description of our seasonality and we don’t generally look at 2007 in any different way. The only thing we can conclude is that the top-line in Q1, 2006 was stronger than normal seasonality, but we expect normal seasonality in 2007. Peter Dionisio - Morgan Stanley: Thank you.

Thank you. We will now move to our next question from John Bucher from BMO Capital Markets. Please go ahead. John Bucher - BMO Capital Markets: Thank you very much. As you look at the 5% growth that you anticipated in the industry for the -- to mobile infrastructure market. Do you care to describe whether you see more growth in non-radio networking equipment for mobile infrastructure versus radio access network? And if you do see more growth there, what do you think the impact will be on profitability, if any? Thank you. Carl-Henric Svanberg: What we see in non-radio, if you look at a network, it's basically in mobile network some 80% - 85% of the network is radio, so that is what mobile infrastructure to large degree is. And, we see no change in that as such. I think, we see a rather a quite stable mix of what is new product and added capacity and still activities on the GSM side and growing wideband CDMA, HSPA activities. What is important to -- when you look at that 5% is, what I said also in the market outlook is that, we outpace the market and grew ourselves with some 10%, and we continue to see opportunities to outpace the market. John Bucher - BMO Capital Markets: So, your thinking behind the question there was that perhaps some of the IMS initiatives and some of the other more IP-centric network element growth in 2007 might cause that ratio for radio to be something less than 85%, but you don’t -- it doesn’t sound like you see that? Carl-Henric Svanberg: Most of what is sold today is, when it comes to core networks, that is of course a continuous upgrade of legacy networks and old circuit switching and so on, but basically every operator is turning to softswitch and that is the first important step here introducing also IMS, where IMS very much plays the role -- like windows in a computer. It's the enabler of all the services and applications that you add to the network. We've had a very successful year in IMS with more IMS contracts than anyone else. We are the clear leader in that segment. Still IMS as such is not a huge revenue driver. Then if you take another generation step again in next generation switching, but that is a little bit ahead, that is where IMS and intelligent routers will do the switch work, and that will be -- and both softswitch, if you like, but it doesn't really change the mix of the -- for 2007, when it comes to the importance of radio. John Bucher - BMO Capital Markets: Thank you very much.

Thank you. We will now move to our next question from Gareth Jenkins from Deutsche Bank. Please go ahead. Gareth Jenkins - Deutsche Bank: Hi. Sorry to follow-up I missed on, the market growth of around 5%. I just wonder whether you can categorically say that your own expectations haven't changed given Europe saw a 40% market share and whether it is just the other vendors out there that you feel are not performing as well as your expectations? Second, I just wonder, if you could tell us what the currency impacts were for 2006 on your -- on your top-line? And then, finally, in terms of the networking capital moves, could you give us a sense of how much of that is built for Japan and when we see an end to that? Is there a continuing buildup in Japan, will that taper off? Thank you. Karl-Henrik Sundström: Well. If we -- the first question is quite simple, we haven't changed our view on the outlook for ourselves. This was more a correction of when we saw others come in. When it comes to currency, I just have a short comment on that, and then let Carl to comment on it. And therefore, first, I will answer your last question on Softbank and the Access -- that is clear that all newer major projects do tie-up capital more than of course expansion projects do, but they are always there. Right now, it is the Access and Softbank and before that, we had Telstra through (inaudible) and before that we had Cingular. So, I think that shift, we don't see a shift in that sense. We have rather seen a somewhat higher degree of larger project source including more turnkey nature, but we are not going to see a shrink of that, more stability as we see it. When it comes to currency, my only overall comment is that remember that we are basically in competition with other Euro-based competitors, which means that we have cost in Euro currencies and we sell therefore in Euro competition. Still we sell a lot in US dollars, but that is a translation done -- translated through the actual currencies at the particular point in time. And therefore, it doesn't change really or has much impact on the numbers as such. We have hedge the contracts, when we land the contract. So, we know what currency we are cashing in on. I'll Carl to answer [also thereon]. Carl-Henric Svanberg: And you can see that also in the reports and exhibits that the average dollar rate hasn't really moved at all during the year. So, it has had no impact basically at all. Gareth Jenkins - Deutsche Bank: Thank you.

Thank you. We now have a question from Tim Boddy, from Goldman Sachs. Please go ahead. Tim Boddy - Goldman Sachs: Yes, thanks very much. Given, I guess, the slowing industry growth outlook, obviously the key question is, you are in situation and the -- it does seem with some much consolidation happening in the industry, there will be an opportunity to take share in 2007. I guess really the two questions that come would be, first, how focused are you on gaining share, rather than potentially enhancing or increasing the margins in your core business, which is more important to you? And then, secondly on our estimates, you've probably taken something like 2.5 to 3 points a share in 2006. Can you do the same again in 2007? And if that’s possible, where in the long-term do you think your market share can go in mobile infrastructure? Thank you. Carl-Henric Svanberg: Well, first of all, just to talk a little bit about the wordings there, we are not seeing a slowing. We don't have a slowing market outlook. We have a stable market outlook. But we conclude it to be rather than 5 and 6, what has happened in the past and how it is going forward. But more importantly, I have to say is, how can we grow? And we have grown market share faster in the last year or two than we have done historically. What we can do over time is of course, it's not hard to predict but maybe not right to comment on in detail, but one have to break it down a little bit into different segments. And when it comes to GSM, for example, we are, I would say, the only provider of GSM equipment that seriously invests today in both new feature and functionality, but also in cost efficiency. And that is simple work done, because 2G will continue to play an important role in large parts of the world for quite some years. In GSM, we are clearly over 40% market share today and we have superior economies of scale. When it comes to wideband CDMA, it’s a young area, and therefore also a little bit difficult to say because it differs when large rollout is taking place. But clearly, we have moved several percentage points this year and especially when it comes to HSPA, we have been -- but clearly, they basic rollout all the networks in either sole or lead supplier in the networks. That is of course an area where we expect others to catch up, not necessarily all the way, but be more active in that field. But certainly, we have probably equally good opportunities in 2007, as we had in 2006. Tim Boddy - Goldman Sachs: And in terms of -- thank you, in terms of just profitability, is the focus primarily on share or are you happy maybe to take advantage the way your competitors are and also like to enhance the profitability? Thank you. Carl-Henric Svanberg: Well, I think that this is always a balance and there is never a way in such a long-term industry with such long-term relationships, that you can say, let's go out and grab market share and sacrifice margin, or vice versa, I believe it doesn't work that way. It becomes a good balance act all the time. And when we grow market share, it's also because an operator out there is nervous about the choice he is making and he wants to make sure he has a stable partner. And the best thing we can do to grab market share is to make sure that we are in the forefront of technology and that we have the most stable networks and the best local support. So, that is how we gain market share, we're not buying market share. Tim Boddy - Goldman Sachs: Okay, thanks very much.

Thank you. We now have a question from Richard Kramer from Arete Research. Please go ahead. Richard Kramer - Arete Research: Thanks. A couple of questions. Maybe a clarification one for Karl Sundström, could you talk through the provisions that you talk for the full year, if we look at the end of 2005 you had about 18 billion of other provisions and suggested you take about 11 this year. Can you give us the update of where that figure is and whether there was any impact on the P&L provisions in the fourth quarter? And one for Svanberg, could you talk a little bit about the pricing conditions you expect in 2007 and beyond? How the shift to the business from equipment to more services and indeed software upgrades, where your clients or your customers have a less chance to go elsewhere, might affect industry pricing going forward, and whether there would be somewhat of an easing of the pricing we've seen from some desperate competitors over the last few years? Thanks. Karl-Henrik Sundström: This is Karl Sundström speaking. Regarding provisions, as I said, when we went through the cash flow statement, we have consumed in the fourth quarter a 3.5 of the provisions against cash. We have not had any positive impact in the P&L in the four quarter or any of the quarters during 2006 from provisions on the contrary. Carl-Henric Svanberg: Buy when it comes to pricing conditions, first of all, it’s of course a tough competition out there. But I think you have some more of the comment about the brutal competition is coming from those that don't have their economies of scale to hang in there. I must say that we -- our experience is that it's fairly stable. I mean that doesn't mean that there is a stable price at all, but we don't see that has accelerated during 2006. Of course when we come into -- when it becomes more and more of software and services, it is clear that your comment is right. I mean it's more -- even more important with economies of scale because you do your initial R&D work and then you sell with very high margins and little incremental cost. And of course that is an interesting phenomena that is happening. There is no U shift here. We have about a third of what we sell is today software and networks, and lots of it is related to the infrastructure as such as we sell -- we don't sell it separate. Some of the increasing portion changes the market conditions a bit. Richard Kramer - Arete Research: Okay, thank you.

Thank you. We move to our next question from Matthew Hoffman from Cowen. Please go ahead. Matthew Hoffman - Cowen: Yeah. Good morning. Carl-Henric, it seems like the news out of China changes everyday. But I was hoping you could describe your expectations for 3G tenders and other emerging markets this year. And especially whether Russia, India and Brazil are expected here in 2007? And finally, discuss the operator interest in emerging markets in 3G. Thanks. Carl-Henric Svanberg: Well, first of all, let me come to China. It's a continuous guesswork and there are times when I guess we wished we had never got into that guesswork. But, what we quite clearly understand as of now is that that Chinese are really trying to give support to their own local standard. That will not mean that it will change the longer-term outlook, because wideband CDMA will be the natural migration for GSM. But, in order to give the Chinese standard a chance to mature and a chance to be tested live, we expect larger networks trials to be performed and networks to be rolled out and therefore licenses were awarded later during the year or so. But, this again is guesswork. I mean, we never have official information, that’s one of the issues, it hasn’t been published. So, this is the best we guess right now. And as I said, it has the reverse effect, which means that there is no split in interesting upgrade needs on 2G. When it comes to the rest of the world, both in Latin America, and in India and in Russia, licenses are being awarded, as we speak, have recently been or will be during 2007. And then it's a matter whether rollouts are sorted or not. But I think when we sit there in a year's time the map will be more complete than it was when we met today. Matthew Hoffman - Cowen: Do you think the 2008 Olympics are still a fireball target for us to think about in terms of 3G, WCDMA in this track for 2008 or is it just going to be TDS-CDMA over there? Thanks. Carl-Henric Svanberg: Well, TDS-CDMA won't solve their ambitions to cover with 3G, because it doesn't help those who come traveling there. So that -- to the extent that one wanted to cover the country with existing 3G world standards, then I guess it may still be possible within their time schedule if they now are satisfied with doing it for the Olympics cities. And of course, that helps the travelers that come there for the games. It doesn't show that the country maybe have taken the step as such. So, I think it can be done with wideband and I think that's the important thing for it -- of for them. Matthew Hoffman - Cowen: Thank you.

Thank you. Our next question today comes from James Faucette from Pacific Crest Securities. Please go ahead. James Faucette - Pacific Crest Securities: Thank you. I wanted to turn quickly to Sony Ericsson and just sort of comment questions on that. Obviously it's an increasingly important contributor to your earnings, and I am wondering if we should expect you to continue to consolidate that just as a part of the operating income from an accounting perspective or there has been thought of perhaps introducing that as a revenue contributor as well is the first question. And second question, as it relates to Sony Ericsson, is that you have obviously shown good momentum from -- in that group. Should we expect or in 3G as that takes up, have you been able to continuously increase market share there and what is your outlook for continuing to do so? Thank you. Carl-Henric Svanberg: Well, to start of, the company is growing in importance for us. That is clear to us all. And therefore, we both -- I think we are all equally interested in understanding more of their numbers and what their opportunities are and so on. We describe it more when it comes to these meetings and capital market days and so on. How we're then going to show it? I think we are still in the final phase of deciding. It actually, if we look at from an accounting standards point of view, we could do two things; either the way as we do today, which means that we will have increasing contributions to our operating margins without really adding it because we don't add to the revenue, or we could consolidate the whole lot of it and take out that. Neither of them are very attractive. And in fact, what we are considering doing is actually [sold] half of Sony Ericsson in those segment reporting, because that is the sort of part that your shareholders actually own. And that will give us the revenue and the margins from our half of Sony Ericsson and if it gives us the revenue and margins from the other segment, and I think that could be helpful. When it comes to 3G -- and I think your question was related to Sony Ericsson on 3G, wasn't it? James Faucette - Pacific Crest Securities: Yes, that's right. Carl-Henric Svanberg: Yeah. They have a stronger market share in 3G than they have elsewhere, and that's a pretty natural thing to have. And especially, so far 3G handsets have been focused on richer handsets that can perform all these multimedia services. We expect them to continue to hold our position there. Then of course overtime, 3G will be the prevailing handsets, also for simple voice in and then it's a matter of how their strategy is developing when it comes to the entry segments. But their momentum is strong and it's very helpful for us, as we had launched also in the multimedia segments. And it helps us in the relationship also to Sony where we have operational multimedia services and content. James Faucette - Pacific Crest Securities: Were they able to grow their market share in the fourth quarter versus their third quarter? I am just looking for a little insight into the strength and momentum there. Carl-Henric Svanberg: If you look at their second half, they accelerated throughout the year and they ended the year -- they ended every quarter with a stronger market share. Then of course different, if you look more in detail and here I think it's time for my friend to respond from his point of view, I think that's more important. But it also so that the different players -- handset players tend to have different seasonalities, some have stronger Q4s and others have weaker Q4s. Q4 is always a strong quarter for Sony Ericsson and they did end up very well. James Faucette - Pacific Crest Securities: Good. Thank you.

Thank you. We now have a question from Alexandre Peterc from Exane/BNP Paribas. Please go ahead. Alexandre Peterc - Exane/BNP Paribas: Yes, hi. I want to have a small question regarding seasonality. I am not sure if I got on your comments right. You were saying that Q4 had taken some of the revenue of Q3, so the sequential increase into just reported quarter is slightly higher. And then you commented on Q1 seasonality saying that last year it was lesser and that's obviously due to integration of Marconi. So, I am wondering, are we looking at anything in terms of sequential decline that is larger than the historical average in Q1 '07 or below? Just state a comment on that. And for information, my declaration shows about 24% decline in the first quarter versus the fourth quarter over the past six years. Thanks. Carl-Henric Svanberg: You were right on the comments of Q3 and Q4. We said we expect normal seasonality. I think it is always hard when you go into percentages because seasonality is an average over several years, then of course you could go further back you go into the crisis years and so on. Our only comment that to help you a bit in your thinking is that, last year sales in Q1 was higher than normal seasonality. I don't know, if Gary wants to add anything here or…?

No. The sales last year were strong enough that it changed the seasonal average. It was 19% looking at the most three recent years and the 15 years 27% down. Alexandre Peterc - Exane/BNP Paribas: Okay. And then just a second question would be regarding AT&T Wireless. We've seen some comments that they made about the CapEx, particularly 3G CapEx there and they said that they would reduce that quite substantially. Do you see that coming through and will there be other bigger 3G rollouts in North America, which is T-mobile USA, compensated to some extent in 2007? Thanks. Karl-Henrik Sundström: Well, I think the answer to, that the answer to your first question is that, when you do a rollout, when you do an initial rollout building sites -- buying land, building sites, building towers all over to do. As a rule thumb, to double capacity after an initial rollout will cost between 30% and 50%. So, any rollout year of a new network for an operator will be followed by years with lesser CapEx. That gives little indication how in fact the spending will be with us that provides the capacities. So, that is more related to that part. How exactly they will now expand the networks is of course decided on how their traffic volumes and their subscriber growth is going to look like. But it's logical that it's not as strong as the year before, because we have still completed the rollout. At the same time, as you say, we have other businesses as well and that is why we expect more of flattish outlook, if we disregard some opportunities of new spectrum winners. Alexandre Peterc - Exane/BNP Paribas: Okay. Thank you very much.

Thank you. Karl-Henrik Sundström: We are waiting for one last question, please.

Thank you. Our last question today comes from James Crawshaw of Blue Oak Capital, please go ahead. James Crawshaw - Blue Oak Capital: Thanks very much. I guess, I just wanted to touch on one of the comments you made earlier, I think, in the press conference about -- since we're making acquisitions in the areas of multimedia and professional services and I can imagine lot of interesting opportunities in multimedia, but struggling really to imagine, what sort of areas and professional services you think that you're can really -- are [weak in] and need to make acquisitions to strengthen your offering there? Thanks. Carl-Henric Svanberg: Well, let me -- let me first just say that our basic strategy is own organic growth and internal development and we do both acquisitions when we see an opportunity to strengthen our offering, but that they -- we don’t expect them to be neither more, more less than what we have done so far. We will do such when we have opportunities, but they will never be a major. When it comes to multimedia to say, there are always opportunities here and there to do acquisitions, and we are evaluating opportunities as they come along. What services is about that -- is that every now and then we can get across a system integrations company or a local services company that can fit very well while we have strongly expansion need. So basically what it is, is we're picking up talent and picking up employees when -- as oppose to simply just employ people and train them. It’s the faster way to get availability and so on. So, those are not -- has so far never been significant, but as we do announce every now and then that we do acquisition at less time, we want to still mentioning James Crawshaw - Blue Oak Capital: Okay. That's helpful. Thanks very much.

Thank you. That would conclude today's question-and-answer session. I would now like to turn the conference back over to you Mr. Pinkham for any additional closing remarks.

Thank you, operator. And before we finish for today, I would like to inform you that our next management briefing is scheduled for Monday morning, February 12, at 3GSM in Barcelona. The agenda and registration information is available on our website. And regarding our interim report, please do not hesitate to give us a call, if you have any more questions. Thank you, see you next time.

Thank you. That will conclude today's conference call. Thank you for your participation ladies and gentlemen, and have a nice day.

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