Åse Lindskog - Head of Investor & Analyst Relations and Vice President Hans Vestberg - Chief Executive Officer, President and Director Johan Wibergh - Executive Vice President and Head of Business Unit Networks Magnus Mandersson - Executive Vice President and Head of Global Services Business Unit Jan Frykhammar - Chief Financial Officer, Executive Vice President and Head of Group Function Finance

Edward F. Snyder - Charter Equity Research Mark Sue - RBC Capital Markets, LLC, Research Division Sandeep Deshpande - JP Morgan Chase & Co, Research Division Achal Sultania Stuart Jeffrey - Nomura Securities Co. Ltd., Research Division Gareth Jenkins - UBS Investment Bank, Research Division Francois Meunier - Morgan Stanley, Research Division Kai Korschelt - Deutsche Bank AG, Research Division Richard Kramer - Arete Research Services LLP

Welcome to the Ericsson Analyst and Media Conference Call for the Second Quarter Reports. To view visual aids for this call, please log onto www.ericsson.com/press or www.ericsson.com/investors. [Operator Instructions] As a reminder, a replay will be available 1 hour after today's conference. Åse Lindskog will now open the call. Thank you. Åse Lindskog: Thank you, operator, and hello, everyone. You are all welcome to our call today, where we will run through our second quarter report. And with me here today, I have Hans Vestberg, our CEO and President; Jan Frykhammar, our Chief Financial Officer; Johan Wibergh, Head of Business Unit Networks; and Magnus Mandersson, who is Head of Business Unit Global Services. To start with then, I have to make the usual reminder that during the call today, we will be making forward-looking statements. These statements are based on our current expectations and certain planning assumptions, which are subject to risk and uncertainties. The actual results may differ materially due to factors mentioned in today's press release and discussed in the conference call. I encourage you to read about these risks and uncertainties in our earnings report, as well as in our annual report. And so with this said, I would like to hand over the call to Hans Vestberg.

Thank you very much, Åse. Hello, everyone. Let me be brief on the key developments in the quarter as many of you probably listened to the press conference and have read our materials. But in the quarter, we are continuing to stay very close to our customers. And as I mentioned early this morning as well, the last 45 days, we and the executive team, including myself, we have talked to 100% of our revenue base to understand where the market is going, and we don't see any major changes since the first quarter. And remember, in the first quarter and the fourth quarter last year, we said that in the markets where there are some macroeconomical uncertainties, we see, more quarters, operators when it comes to investments for that is the same sort of prevailing in the quarter. But we are not seeing any change to what we talked about in the first quarter. But important for us is to stay close to the customers in these times, to understand how they will act in this market. When it comes to market with political uncertainty, there is no change there, neither the market that has political uncertainty or by -- for practical reasons, not doing much investments, and that will, for a while, continue. And that's predominant in markets in Middle East and in Northern Africa. But there's no news on that. It's basically the same as in previous quarters. The customer dialogue has been very much around network performance and quality of the networks as that is becoming key differentiator. Spectrum, with the expected data growth, of course, spectrum will be important point to have both more of, but also doing it more efficiently in the radio technology. And then very high on the list is monetizing the mobile broadband with tiered pricing and quality of service, driving a lot of changes in the OSS and BSS. And finally, we have added for quite a while, that's, of course, efficiency, discussion and focus more our customers very much when it comes to both network sharing, outsourcing and other types of efficiency gains by using our service or product portfolio. Looking at the quarter, I will be brief here. Growth of 1% year-over-year, down 6% year-over-year for comparable units and adjusted for foreign exchange, that's basically the same as we had in the first quarter. We had a sequential growth of 9%, and the normal seasonality, which is normal seasonality is around 5. We will come back, but both Global Services and Support Solution had a strong quarter and are now contributing to around 50% of the turnover in the quarter of Ericsson. In Networks, Johan will come back, but here, we have the expected impact of the equipment sales of CDMA that is declining and then we had the weaker sales in the quarter in China and Russia. If you then look at the profitability, the core Ericsson had a profit of SEK 3.3 billion, net income SEK 1.2 billion, clearly down from last year driven by Networks, with the profitability of Networks, but also that we have a wider loss in ST-Ericsson year-over-year, not sequentially but year-over-year, leading to earnings per share of SEK 0.78 in the quarter compared to SEK 1.60 last year. And of course, here, we need to remind you that Q1 included a onetime effect of the gain from the divestment of Sony Ericsson by SEK 7.7 billion. So by that, I hand over to Johan to talk about Networks.

Thank you, Hans. So today, we have 2 slides on Networks. So let me start by going through a little bit on the financials on the first page. So as you see in then, we are down 20% year-over-year, if you do an organic FX-adjusted sales, and quarter-over-quarter, we're up 2 percentage. You should remember that first half 2011 was a somewhat tough comparison of today, 3Q 2010, but still we're down 20%, which is a lot. And year-over-year, it was low GSM sales in China. We also see reduced operator investments in Russia and India, among other places. And as Hans said then, CDMA was down some 50% year-over-year. And we started seeing decline back in Q4, and then it has continued. Operating margin ended 5%. We were 14% in Q2 2011. And the drivers for this, of course, this overall lower volumes, we are quite volume sensitive, and with the high R&D spendings we have. And we're also negatively impacted by underlying business mix, with the same more coverage and capacity as before. European modernization projects then have done somewhat less capacity expansions in Q2 versus Q1. If we then move to next page, then I think we see at glance, we seem to do a -- see a very positive discussion among operators, an increased focus and discussions around competing on performance. That's important. That's really a leading indicator for us when it comes to doing future capacity expansions. So that -- I think that is one positive thing. Secondly then, we see LTE is reaching outside the initial rollout countries. I mean, so far, it's been the U.S. and Korea. That's all the major LTE countries. We have right now about 2 million new LTE subscribers per month. We have Canada and Japan also going on, few countries in Europe, but now we see more expansion in Europe. We see more Latin America coming up, Mexico, Brazil, some more countries, Chile. And I think we are really encouraged here by our well-proven LTE solution that is -- really, it's outperforming competition, both technically and market share-wise, as we wrote in the report. And I mean, on shape the equipment and up until end of last year, we have some 60% market share and I have still to read an analyst report that don't put us as being the leader in this area. And we also here then have established ourself with a really strong platform product, and that is performing extremely well on quality and performance. And now we're adding on -- now pace in development is rapid. There's a lot of new features coming on here and pace is quick. And we are in the most important countries when it comes to smartphone usage, and this is good for me. And key priorities then moving forward is, of course, to improve on profitability. I mean, we are, of course, not happy with the 5% response that we have. And of course, we are working and both -- as Hans and Jan said before, that we will have a -- the effects of the modernization projects will have an impact at the end of the year and beginning on next year. And we're also working a lot on both on the revenue side, as well as on the cost side, to make sure we do what we can without jeopardizing our strong portfolio position and the technology leadership and the things we've done. And also, feel encouraged about the 7 contracts, the 7 customers that have chosen SSR for --when it comes to IP, and this is important to us. It's still small money revenue this year, but it's real important going forward. It's real encouraging. We also then see next step when it comes to the voice business. Those operators investing in LTE, they are now starting to prepare for launches on moving voice over to LTE. And there, we are working really hard to capitalize on both on our strong position in LTE, as well as in stock, to each quarter. And then finally, we are working on supporting our customers in -- to migrate over to LTE. And I think we had Sprint being out yesterday also then launching LTE market, and I noticed it was only Ericsson market that they launched. And also then, we continue to be obsessed by superior performance in our projects and our product development. We believe it's the key aspect for us and our customers and to focus on that. And with that, I hand over to the Head of Services, Mr. Mandersson.

Thank you very much, Johan, and hello, everybody. We had a very good quarter. We have, again, demonstrated that we can deliver profitable growth. We are seeing 26% growth in Swedish currency adjusted. We are doing 18% year-on-year. All our business lines is driving high growth, as you can see on Slide 1. I think we have, over the past 12 months, worked very much with capability build-up in the foreign plant but also in our Global Service centers, and that has driven a profitable growth for us. We see continuous strong demand for transformational services delivered by the Consulting & Systems Integration team. And of course, it's a great focus from the operators to reduce OpEx and also do technology shift that's driving these sales. We continue to lead in Managed Services with 17 contracts over the Q2 here. Of course, the sales is very much driven of the -- all the 70 contracts that we took last year. So all in all, I think we have very good momentum on Professional Services. Network Rollout, it's then an effect of all the new contracts that we have done with Networks. And then, of course, we have -- it's very much driven by the European -- the result is very much driven by the European modernization. And I think you spent time on that already in the morning. And of course, we -- Johan and I, we are driving as much as we can Network performance and execution in the projects we are having around -- in Network Rollout. I think we also demonstrated good sequential profitable growth on Professional Services. I think it's -- again, it's very much driven by the setup we are having with our local and global delivery structure, which is unique in itself. We will continue to drive that throughout the year. Also, I will say that a year back, we had 5% operating margin, and we have improved that with 1% this March in Q2 this year. So all in all, I think we are quite strong in driving the operations at the moment. And with these few words, I hand over to Mr. Vestberg and Support Solutions.

Thank you, Magnus. So we're looking to Support Solutions for the quarter, up 47% year-over-year. Here, of course, we have the impact of the acquisition of Telcordia, excluding that, growing some 16% including adjusted for foreign exchange rate. So we are growing well in billing solutions in the Middle East, Sub-Sahara and Africa and also in the TV area in this quarter. Telcordia added roughly SEK 600 million in the quarter in the segment of Support Solutions. We are just splitting this between Services and Support Solutions, 50-50, the revenues from Telcordia. The operating margins, 12%, which is the highest since we started reporting this segment, at least, as I can remember. This is driven very much by the favorable product mix and the increased volumes. We are volume sensitive in Support Solutions, as it's a lot of software and a fixed cost in R&D for that. At the same time, we are taking down the cost levels, and that creates this 12% operating margin. The key priorities right now for Support Solution, besides to execute on the strategy that we outlined in the beginning of the year, is, of course, transform this momentum to a sustainable profit at this level. And the second is that, of course, integrate Telecordia -- Telcordia in a good way to see that we get all the benefits from that acquisition. If I then continue with the regions, and out of the 10 regions that we report, 6 of them were growing year-on-year and 8 of them were growing sequentially. Some highlights, North America, we talked about, still growth in North America despite the decline in CDMA or the expected decline in CDMA. Latin America has been growing for quite a while right now, and we're also -- in this quarter, we're 9%. Northern Europe and Central Asia, here, you see the impact of Russia, down 26% year-over-year. Western Europe and Central Europe, down 6%, still a good momentum for Services. Here, we have a -- proposing a higher share of Global Services and Support Solutions, which is higher than 60% in this region, indicating that the investments in equipment is lower here at the moment. Mediterranean is also growing, 12%. Middle East, 4%, they have been now growing for also some quarters. One region that is really coming up after some tougher times is Sub-Sahara, up 26%, driven on about cheaper smartphones coming out in the region but also Nigeria, which is one of the most important markets. India, we have discussed. Equipment sales in India is fairly low compared to last year, down 39%, the whole region India. And that, of course, a reflection of the uncertainties of regulatory environment. However, quarter-on-quarter, you see that they are coming up now 20%. Then we discussed China and Northeast Asia. Of course, what is speaking out here is that China 2G is lower compared to year-over-year. Last year, where we had a strong sales of GSM but we also decreased it quarter-on-quarter sequentially. Here, there's a lot of LTE happening at the moment. Southeast Asia and Oceania, up 21%. Here, of course, Indonesia, very important market growing, and there's a lot of 3G. In the other area, where we have our IPR licensing, we have the stable development on that. And -- but we also have the multimedia brokering IPX growing in this area as well. So by that, I hand over to Jan.

Okay. Thank you, Hans. Then let me give you some brief highlights on the P&L and balance sheet. We start with the very important 3 indicators that are impacting the gross margin and the dynamics of the gross margin, and the first one is the business mix. And by that, we mean the share of coverage versus capacity projects and also the modernization projects in Europe, as well as the overall Services share in the company. So let me then start with saying that we had in this quarter, as far as I can remember, looking back, probably the strongest Services share ever in the company in terms of revenue share. And for you then to understand a bit better on what that does to our gross margin, we have then said that if you look at the 32% gross margin we have in the quarter versus the 37.8% we had last year in the second quarter, about half of that reduction has to do with growth in Services, which I think is important for you to know. Fundamentally, of course, growing Services is good for the business and good for the bottom line, but it has an impact on the gross margin. And we also had a -- the impact of the European modernization projects if we compare with last year, because the projects were all in full execution in Q4. So there are these impacts. And if we then look at this quarter specifically versus last quarter, I think we have already commented on the fact that the Services share has increased again. We also have the same impact of the modernization projects in Europe as we had in the first quarter. The only big difference, I would say, is that we had somewhat more of capacity saves in Q1 than what we have in HSPA and than what we have in this quarter. Overall, we have also said that the current business mix, which means then that we have more coverage projects than capacity projects than if you look in the historical perspective, that business weeks -- mix will prevail short term. And I'm fully aware of that we have said short term now for several quarters. But with the current visibility we have with the projects that we have won, this is the best assumption that we have right now. Then if we go to the operating expenses, let me then also start there by saying that we had operating expenses of SEK 15 billion versus SEK 15.8 billion a year ago. A year ago, we also had a big restructuring charge in the second quarter. But if you look at an organic operating expense, excluding restructuring charges, it is down year-over-year. If we look at R&D, we have -- we had a run rate in the second half of 2011 that was high. Our aim and our ambition was to gradually, throughout the year, reduce the run rate, having then in mind that technology leadership is absolutely key for us as a value driver. In this quarter now, we have increased the guidance a little bit from SEK 30 billion to SEK 32 billion versus SEK 29 billion to SEK 31 billion. That new guidance is still a reduction compared to last year. And it is -- has simply to do with 2 reasons, one is FX and the other reason is to secure the potential we see on the -- in the radio area. And for us, whether we have a guidance increase of SEK 1 billion or not is not important here. The important thing is to capture the value of the opportunity in radio. When it comes to operating expense overall, our focus is to optimize and to optimize. That's extremely important for us. Operating margin, 5.9%, as Hans mentioned, impacted by the lower profitability in Networks. And if we compare it to a year ago also, we had a higher restructuring charge. If we then go to ST-Ericsson, ST-Ericsson has had a conference call earlier today, so I refer to that conference call for more specifics. The aim here is really to look at the ownership perspective of ST-Ericsson. The main focus of the company is to secure the successful execution of the company transformation and also the revised strategy that was communicated in April. Sales in the quarter improved somewhat, and operating expense continued to go down. All in all, that meant that if we compare with the first quarter, the operating income improved, still a significant loss. Then what we have done this quarter is that we have highlighted the exposures we have at Ericsson towards ST-Ericsson. So we have the investment and, as well, the loans to ST-Ericsson. We have to be transparent to all investors, how -- the exposures we have. Then if you look at the balance sheet, I think that we have, due to the fact that we have more projects in the mix and we have had so for a couple of quarters, the inventory working capital level is higher than in the capacity cycle. In this particular quarter, we also ended the quarter with a very strong June. That meant that we had some impact on the accounts receivables that should be timing. Then if you look at the inventory, slightly up versus the first quarter. Both on accounts receivables and the inventory, there is some FX impact. But fundamentally, it has to do with the higher project activities. So our main corrective measure here is really to continue to focus on delivering these projects with as short lead time as possible. Then finally, on the cash flow, minus SEK 1.4 billion in the quarter, driven mainly then by accounts receivables. And this is -- from our point of view, we -- you can understand that we are not happy with this cash flow. Our ambition is to have cash conversion about 70%, but I think also that we understand the reasons behind it. We also paid a dividend in this quarter. So all in all, we had a net cash of SEK 25.9 billion. I will then end with some comments on the refinancing activities. We have been very active in the quarter to extend the average debt maturity profile. But in doing that, we also had an objective not to increase gross debt. We have tapped into the U.S. bond market for the first time ever in our company history. And the purpose of that is, of course, to diversify the funding sources but also to create a natural hedge. At the same time, we have repurchased some EMTN bonds and paid back some SEK bonds in order to keep the gross debt level at the same level. The final result is a more diversified source of funds and an extended maturity profile. With that said, Hans, please.

Yes. As we sum up, of course, well, we have invested in both R&D and market share the last 5, 6 quarters, and we are in the midst of that execution. That's the most important thing we have in front of us. But if you look -- if we do that, of course, it's to -- really to take that investment to do something good of it, to make a profitable growth. I think that is the whole management's focus right now. That means that cost and efficiency is very high up on the agenda in the whole management team. We are doing quite a lot of cost and efficient measures at the moment and -- which we clearly believe will have an impact. And finally, what we will not compromise on this, of course, our technology and service leadership, which is paving the way for us to continue being #1 in this industry that, long term, should pay off in the greater value. So I think that's where we are, and we really are focused on continuing taking these forward in a good way. Åse Lindskog: Thank you, Hans. And by this time, operator, we are ready to take questions.

[Operator Instructions] Detailed information is provided in the report, and Ericsson's Investor Relations and Media Relations team will be happy to take any additional questions and discuss further details after the call. [Operator Instructions] Edward Snyder from Charter Equity Research is now online with a question. Edward F. Snyder - Charter Equity Research: A couple. Jan, why was the late billing in the quarter? I mean, it's one of the reasons you had the cash flow and the inventory issues. I'm just curious how that shook out, and was it an anomaly? Do you expect it to occur? And then, Hans, in terms of the CDMA sales dropping off U.S. as expected, it sounds like you're not seeing commensurate increase in LTE. Is that just market share loss and not spending so much? Is it macro? And do you expect that to reverse? And then on profitability, I understand you've got a lot of coverage projects going on right now, and you're expecting to pick up as we head into the fourth quarter. Is that mostly -- what's the profile of that, first of all? Do you expect it to be evenly spaced over the next year or so, the return to profitability, just on the different business mix? Or will the macroeconomic environment help you out in the longer term?

Ed, so this is Johan with the first question. I mean, it's -- the answer is very simple. I mean, if you have a very strong June and your average credit base is around 100, they end up in the balance sheet.

Right. And also, it may mean that as we have a high project activity, a lot of projects are finished by end of the quarter, and that was part of it as well. So that's why it was late invoicing, and collection was not feasible. I think I heard your second question, I'm not sure. You have to correct me. I heard it like CDMA falling in U.S., asking if that is offset by LTE or not and if we will see CDMA rebound. I think that was the question. Of course, we see an uptick on LTE, that's for sure. North America is one of few markets that are doing quite a lot of investment in LTE. The CDMA decline is expected, and we're not expecting that will come back. Remember that this -- we talk about CDMA equipment, we have CDMA services, everything from maintenance and all of that, that will continue for a long time as it's many, many subscribers on CDMA. But from equipment, we don't envision, at this moment, that these investment levels will go up. They will continue to go down. Then was that the question then? Edward F. Snyder - Charter Equity Research: Yes, it was. Primarily, no, it's not a commensurate increase in LTE to offset your CDMA. Verizon and now Sprint, of course, are augmenting their CDMA networks with LTE, but it doesn't sound like it's a one-to-one swap for you. Is that share loss? Is that just less spending on their part? Or is it something that, in the future, you expect to pick up more LTE as they start rolling out more?

Again, you're cracking up a little bit. I will try again. I think you asked if there's share loss because we're in North America? It's just that last year, of course, it was quite heavy investment in CDMA and very little right now. Of course, there are LTE investment, but not really offsetting totally how much we're seeing on -- we saw on CDMA. There are, of course, other investments on HSPA, et cetera, but now we were just talking about that small in between. But of course, over time, LTE will offset CDMA as CDMA will continue to decline. When it comes to the profitability on Networks, we just need to split those 2 questions in, and that's what we're trying to do in the quarter report as well. There are 2 things if you isolate impacting the profitability on Networks. One is the European modernizations and Jan talked about. They started -- some started 18 months ago, some started all in full swing Q4 2011. What we're saying about the European modernization right now, they will start to gradually decline by end of 2012. So that impact will start to gradually decline by end of the year. When it comes to the mix, worldwide mix in Networks between capacity and coverage, then we say that, short term, what we can see in the funnel and in ordering is that will prevail in short term, that mix. We're doing a lot of coverage projects. But they are 2 different things. The European modernization is one and then the mix between coverage and capacity. And that, we say, will prevail short term. So I think that's sort of what we're exactly describing in the report.

Mark Sue from RBC is now online with a question. Mark Sue - RBC Capital Markets, LLC, Research Division: Hans, if we look at the Network modernization winding down, can you share us what exactly happens to the gross margins in a quantifiable metric way? And then if we consider the Services share, the business mix, coverage and capacity, overall, when you put it all together, can gross margins get back to 35%? Does it improve to 39%? How should -- what you guys just kind of think about gross margins near term and then maybe longer term?

Now we don't guide on any gross margins here. I mean, it depends, as you said yourself, depending on how good we grow in Services versus Networks and Support Solutions. That's going to be a mix issue on the gross margin. So that is really hard to say, and we're not guiding on that. But everything the same as -- if everything goes the same and you have a gradual decline -- starting to have a gradual decline by the end of 2012 on modernization, that should, of course, have a positive impact on the gross margin. Everything else, the same. So that's what we're saying. Mark Sue - RBC Capital Markets, LLC, Research Division: Hans, if everything is the same, what would be the impact of the Network modernization then? Should it be 200 basis points, 100 basis points? Or is there a range of how investors should think about when Network modernization winds down?

No, we are not giving any range on that one, how much it is. But of course, as we talk about these 2 elements in the gross margin impact on Networks, those are the big ones that we have there, meaning the capacity coverage and the modernizations. Of course, they are of importance for modeling the gross margin, but we are not giving out any range how much it will impact, et cetera. But everything the same, mix and all of that and a start to have a gradual decline of Network modernization by year end, end of 2012, we'll, of course, see gross margin going up. But again, everything the same. Mark Sue - RBC Capital Markets, LLC, Research Division: Got it. And subsequently, there will be no further modernization projects around the world?

Now remember, this was a distinct effort we made. And we were clear to the market and maybe we shouldn't even been clear on talking about it. But this, we started talking about Q4 2010, that Europe came up. We had low market share off of 3G. We wanted to come back there because we believe that a footprint will create a much stronger Ericsson long term. There are norm on these all around the world all the time. And that we are dealing with all the time, and that we'll continue do. But there are no specific region, no specific thing that we need to do right now to do -- gain market share that we need to announce. But there's going to be deals all the time, but it's nothing as distinct as the European modernization.

Sandeep Deshpande from JPMorgan is now online with a question. Sandeep Deshpande - JP Morgan Chase & Co, Research Division: I have a question, Hans, on strategic view of the company. I mean, Services continues to grow as a percentage of revenues, and Services margin remains double digit. So I mean, you've recently acquired Telcordia. How do you see the Services margin, even on the EBIT line, growing over the next few years?

No, I think if you look at the Global Services, I think the Professional Services have been in the band and the brackets on an EBITA level of 13% to 16% since we started to report it, and that is, of course, driven about how much growth you have within as well. Because when you have growth, you will capture some more -- or impact on the gross margin. But that's where we are and, of course, we are on a mission to keep that. The big swing factor in Services, of course, Network Rollout, which is very much impacted by the European modernization, that, of course, we are far from happy with the profits we have on Network Rollout. But that is -- was sort of a constant decision we made. Then, of course, expansion in Services into media and broadcasting, et cetera, OSS/BSS, is very important for us this quarter. I tried to mention also System Integration and Consulting that we don't talk so much about. Magnus tried the same. This is an important area for us that is growing very fast, coming very much from our investment in OSS/BSS.

Achal Sultania from Crédit Suisse is now online with a question.

Two questions, if I may, to Hans. On European modernization contracts, obviously, basically, we expect this gross margin impact to stretch out 'til the end of this year, right, as to earlier expectation of probably ending by the end of Q2. Now what I'm just trying to guess is, is it due to spending cautiousness from operators, or is it to do with the complexity of these kinds of projects? And also, is there a risk that some of the southern European countries may actually lead to further stretching out of these modernization contracts into early 2013? And then I've got a follow-up for Jan.

When it comes to the European modernization, the only change we made was initially when we thought they would start earlier. But the time frame of 18 or 24 months has been there all the time, and we're keeping -- all of them were in full swing in Q4. So we are not changed when they will gradually start to decline. That is basically the same because they have the maturity of 18 to 24 months. We thought they would start maybe in Q1 2011, more of them, and they thought little bit slow because of a complex. But since then, it has been exactly sort of the plan that we have seen. So far, we are not seeing any impact on the current modernization due to the macroeconomics. We are not seeing that.

And basically, Jan, on the OpEx side, if I look at your revenues in the first half of this year, they are slightly down a percent year-on-year and -- but the clean OpEx number, excluding restructuring, is actually flat to slightly up. And given that you've taken over SEK 2 billion of restructuring charges in your OpEx in the last year and a half, shouldn't that OpEx run rate be much lower? Because -- I guess my question is, should we expect this OpEx rate -- run rate to actually slow down in the second half? Or is it something that you think is -- that the current level is the normal level for your business?

For the question, please also remember that Telcordia came into the numbers in mid-Q1, and their operating expense is actually predominantly selling and G&A expense. So you should know that as well. Having said all of that, our plan has all the time been to work ourselves down from a run rate point of view. And all the activities that we are running, both in terms of transformation in -- continued transformation in R&D and work on efficiencies in administration and so forth are ongoing activities that should start to yield here gradually.

Stuart Jeffrey from Nomura is now online with a question. Stuart Jeffrey - Nomura Securities Co. Ltd., Research Division: Hans, you mentioned you had seen most of your customer base in the last 25 days. I was hoping you might be able to share a bit more sort of insight as to what's happening amongst operators. Specifically, just probably going back to last year, everyone was very surprised by what happened in the second half, and you had an exceptionally unusual network dynamic in Q4 in terms of seasonality. I know you don't like to talk about specific quantified guidance, but could you just take us through what's similar and what's different this time around? Just to help us have a bit of confidence as to where the second half might be trending.

You're right. I mean, we don't guide on specific quarter or half years. But the discussions and I can relate back to the sort of -- of course, we all discussed the environment around us, the fundamentals for the industry, new subscribers, uses of mobile broadband, new devices. My conclusion is that, that remains, that fundamental remains. The other is, of course, in certain markets, we talked more about macroeconomics. And here, you can -- you got the feeling that there are more contingency planning than before or equal as in the first quarter, but they're doing a lot of contingency planning. In the discussion, we are not seeing any major change, as I said, on macroeconomics when it comes to modernization in Europe or something like that, that they are halting them. That's what we have right now. And for us, it's to stay closer to the customer all the time to see what's happening and see if there are any changes to that, but that's what we have right now when we closed the books by the 30th of June 2012.

Okay. And if I can add there, Stuart, a few things. I think if you look at Networks per quarter in 2011, it was a quite strange year, in the sense that it was really no seasonality. But a lot of things happened within the year, as we all remember. I think now, in 2012, our supply chain is working excellent and we have, as Hans said as well, in this quarter, we had -- we made a comparison to a normal seasonality. So I think that this is, for many respects, a bit more normal year when it comes to supply chain.

Gareth Jenkins from UBS is now online with a question. Gareth Jenkins - UBS Investment Bank, Research Division: It's a bit of a follow-up between the last 2 questions. Just on seasonality in OpEx. I wonder if you could just help us understand the OpEx, maybe even into the second half of the year. Jan, you talked about maybe being able to work it down somewhat, but I think typically, OpEx is about 50-50 during the course of an average year. I just wondered whether you feel that's the case. And obviously, related to that, what you see Networks margins doing through the course of the back half of the year as a result? That's the first one. And just second one, given, again, that you've spoken to lots of your customers, I just wondered whether there's any sense of panic among those customers, given the financing position of, at least 1, if not 2, of their vendors currently.

Okay, Gareth. I think -- so I talk about my favorite topic, OpEx. I think that -- so if you look at the -- if we start with the research and development then. We ended last year on a high run rate for a couple of reasons. First and foremost, we wanted to secure the timely launch of our IP router portfolio, that's the Smart Service Router. We also wanted to secure that we could deliver a CDMA baseband into our RBS 6000. And finally, we wanted to secure the TD-LTE part of our portfolio. So those are our 3 priorities that we focused a lot on in the second half of this year. Now we, obviously, then are working ourselves down in terms of research and development, still with the important disclaimer, as I said in the beginning. Because I think that research and development and the ability right now to have sufficient funds to capture more markets or extend leadership is very important. But we also work with efficiencies there. It is a gradual decline. CDMA is, obviously, one area where we work with reductions and other areas or, really, areas that does not impact, what I would call, productive R&D. It's more around how we perform testing and things like that. So it should -- it's normal, the good improvements that we're talking about. Then if we talk about selling and G&A, I think on the G&A side, we have good programs in place, both with finance, ISIT and HR, in order to work down the cost base. These are multiyear programs, and they yield a quarterly over quarter improvement. So those are no -- we have continue with those programs. Finally, on the selling expense side, as I said, the Telcordia numbers are now in the picture. But having said that, we -- the whole new go-to-market model that we launched 2 years ago aims at sharing sales resources and pre-sales resources in better way to become more effective. So short answer, run rates should gradually come down.

Then you had a question about Networks gross margin coming back. I can only refer to what I said before. Everything the same, Network modernization will start to gradually decline by end of 2012. Short term, in the funnel and in the orders, we have still more coverage than capacity in our delivery Networks. That's the same comment we made in the report, and I think I said a couple of times. Then you asked if we -- if some operators, customers were worried for their indebtedness, et cetera. I cannot go into specific customers, but it's clear that some have pretty high indebtedness and, of course, are trying to preserve and to reduce that. That can lead to more opportunities in Services and then transformation. So -- but nothing particular to point out on any particular operators. Gareth Jenkins - UBS Investment Bank, Research Division: All right, Hans. Could I just follow up on the second point on that question. I was actually referring to are you seeing any panic amongst the operators regarding the financing position of their vendors, and therefore, picking up some business as a result of that?

I don't see any new behaviors. I think we have nothing new really to say around the competitive dynamics and the relationship with the operators. That's really for our operators to comment rather than us, I would say.

Francois Meunier from Morgan Stanley is now online with a question. Francois Meunier - Morgan Stanley, Research Division: Actually, I wanted to follow up on Gareth's question, given what's going on with Alcatel, NSN and also LG, to some extent. The pricing last year was pretty bad for [indiscernible]. Is it getting better now? Because of what we're seeing in the competitive environment, which looks like it's improving.

Was that the question or a comment? Francois Meunier - Morgan Stanley, Research Division: No, it's a question. Is the pricing improving?

If you look at the pricing, I mean, it's less of a distinct European modernization, of course, in general then, but we have not seen any change in the competitive landscape. I mean, big deals sort of where you compete for footprint, then it's, of course, competitive. However, we see [indiscernible], who is competing from one quarter to another with -- there is definitely quite a lot of things happening in the industry at the moment. I mean, we meet different competitors in different markets that from one year ago were probably others that we met there. So yes, they are changing. But on the pricing environment on one quarter, I wouldn't say that I have seen any major changes. Francois Meunier - Morgan Stanley, Research Division: And do you feel like that you have to be as aggressive as you've been last year in terms of pricing aggression, basically, to take market share in general or in market share coming to you more easily?

We don't feel that we need to be that aggressive because we have no such goals at the moment.

Kai Korschelt from Deutsche Bank is now online with a question. Kai Korschelt - Deutsche Bank AG, Research Division: Yes. Just another question on the business mix, and I fully understood what you're saying about maybe the rest of the year. But I'm just wondering if we think about more on a higher level, sort of going into next year and beyond, it looks like in Latin America, there'll be 4G contracts tendered to new -- possibly, have China and maybe, at some stage, Africa. So I'm just wondering, as the majority of your regions that are still in 3G mode move to LTE, will those sort of deployments and rollouts also impact gross margins negatively? And I guess the question, is there a risk that this may just sort of happen and cancel out the margin improvements that we could see in Europe? Or do you think the LTE deployments in those sort of regions won't happen next year and they're really more maybe a 2014-type story?

Still, we need to understand that the majority is deployment on 3G. There, of course, is going to be 4G, but that's clear. That type of mix we've had all the time, that we always have technology shift so that we need deals to manage. I think the modernization was something distinct. We're going to have, of course, new 4G networks coming up in certain market, but that means also that some 3G markets will be in capacity. So that is a mix that -- we're going to see how that turns out in 2013. What we say right now, short term, the mix that we have right now with the capacity and coverage, that will prevail in short term.

Also, Kai, one comment more from me there. Also, I think we revert back to the discussion we had when we met here in Sweden last year. The importance of knowing and understanding the advantages of the RBS 6000, it is hardware heavy in the beginning and then also feature expansions and annual software upgrades and so forth is there. So I think there is also a possibility to up-sell with new softwares, whether traffic is coming or not, because this is still a lot of new features asked for. Secondly, as the ecosystem continues to expand, both on 4G and 3G, more and more smartphones, more and more usage is also, of course, driving the need for more software and feature upgrades.

Our final question comes from Richard Kramer from Arete. Richard Kramer - Arete Research Services LLP: Couple of questions that I don't think, really, have been touched on exactly yet. Hans, you made the comment in the statement that the focus is now on translating market share gains into sustainable profit growth, and that was something we haven't heard before. And yet it's kind of hard to see how Networks is making much money now beyond the IPR income. When you look out on a 12- to 18-month view, are you expecting increased volumes to change? And if not, why wouldn't we see a much wider restructuring program than the gradual cost reduction that Jan just mentioned? And then one for Magnus as well. Back at the Capital Markets Day, I think you were suggesting that NRO in a normal world should be breakeven business, and then you had one-offs that had led to the billion of losses up through the 9 months of 2011. And now the last 3 quarters, obviously, the losses are much larger. What's causing the losses in these rollout deals, and can you be a bit more specific? Because it seems to be odd that you should be losing money on rollout contracts.

On the Networks then, again, I think that it's a natural step here when it comes to profitable growth. We're not changing the strategy. We're going from being #1 in everything we're into, mobile networks, services, OSS/BSS, et cetera. So the strategies and the combination of the assets is still the same. However, as you yourself said, we have been in the face of investment in R&D, as well as in market share. That we don't see at the same level going forward, and therefore, we also believe that we can bring down the cost over time here. And then of course, everything equal with this project, over time, should make the profitability higher in Networks. Not saying it's now or tomorrow, but saying that, that is, of course, are the management's focus right now, and we are not satisfied with the profitability, as such, right now. But there are reasons why we're there, and we will do everything to work ourselves out of that.

Okay. On the question you had there on Network Rollout, just to be clear on that, the Network Rollout business, the ambition is there. This should be a -- this is a business that we should make money on. It will, however, have lower margins. The reason for the losses is related to the European modernization projects. Richard Kramer - Arete Research Services LLP: But what's gone wrong in those contracts if there -- you have so many persistent losses? Why isn't, over time, you're starting to reduce those losses as opposed to seeing them at the same level?

No. I mean, we are in the middle of the rollout of the European modernization projects. I think we have talked a lot about the dynamics of those, and we have said that all projects are in full -- was in full execution in Q4. And we will continue to have an impact of these projects throughout this year, gradually improvements end of this year. So there is -- I don't really understand what you're after. I think that this is very clear, that this is related to the European modernization. Richard Kramer - Arete Research Services LLP: Okay. And, Hans, just to be clear on your comments. You're not expecting a volume uplift. You're saying it's about bringing down cost in the Network business over time?

So I think that we do not -- so to begin with, we do not guide on volumes. What we say is that we have an impact on gross margin, both on Networks and Network Rollout, when the mix of Network modernization starts to be reduced. Then we also have the other important impact that we discussed in the -- at the Investor Day, and that was the fact that once you have the hardware out there, for instance, for multi-standard radio, the next cycle is more software heavy and, finally, as Johan also mentioned here, the importance of winning these, for instance, with the Smart Service Routers. So there are opportunities to improve gross margin also in a volume scenario that is not growing. Again, we are not guiding here for future revenues, but we are rather saying that we understand what we need to do in order to improve gross margins. Åse Lindskog: Thank you, Richard, and thank you, everyone. This concludes our call today then. So bye-bye, and have a good day.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.