Telefonaktiebolaget L M Ericsson and Cisco Systems Inc Partner to Create the Networks of the Future Corporate Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Chetan Udeshi - JPMorgan - Analyst : Yes, hi, thanks for letting me ask a few questions. Firstly, Hans, can you tell us what is your view now on your internal routing development plans? Do you still intend to continue or are you scaling back after this announced strategic partnership with Cisco? And on the $1 billion of potential revenue by 2018, could you give us a sense of the split on how much do you think it will be incremental services revenue and how much will be the resale of Cisco's products and how will it be the margin differential between the two? Thank you.

Question: Chetan Udeshi - JPMorgan - Analyst : So would you compete with Cisco on the edge routing despite the strategic partnership in the future?

Question: Chetan Udeshi - JPMorgan - Analyst : Understood. Thank you.

Question: Pierre Ferragu - Bernstein - Analyst : Good morning, Peter, Chuck, and Hans. Thanks for taking my question. A quick follow-up on the near-term revenue upside you see in the partnership. So this $1 billion you see on its side, should we understand it as being more or less a ceremony? So that's going to be the $1 billion of reselling revenues [or next time we'd] recognize and most of what Cisco sees of it in the near term, it is so actually reselling? And then I have this sort of quick follow-up on the synergies you've announced on your side, Hans. If I think about it in the long run and relative to what you just said, is this partnership means that over time, you're going to leverage your [let's see] IP routing technology of Cisco? I would expect the deal to have more impact on your cost than SEK1 billion because I would assume that maintaining like a fully fledged ad routing technology and your R&D cost you more than that. So could we see more synergies beyond 2018 on that front?

Question: Pierre Ferragu - Bernstein - Analyst : Thank you, guys.

Question: Steve Saunders - Light Reading - Analyst : Nice to meet you, Chuck. Congratulations. You've certainly given your friends in [EPU] in Paris a headache today. My question is this, the virtualized or new IP network that service providers are installing to upgrade their infrastructure for 21st century service have a half-life which is going to be measured in decades. How do these customers know that the solution they buy from Cisco SON today will be jointly supported by an integrated team in five or 10 years' time? Is it really likely that a partnership that's forged during the most tumultuous period ever in the communications industry's history will last as long as the networks that you will collaborate to sell?

Question: Steve Saunders - Light Reading - Analyst : Thank you, guys.

Question: Tim Long - BMO Capital Markets - Analyst : Thank you. Maybe one for Hans, one for Chuck, if I could. Hans, when you think about the business today, just curious, I know you've done some work with Cisco, how much of your networking needs are currently met by Cisco and how much by others? Just to get a sense of how much actual changeout or migration there will be over time. And then for Chuck, just curious about how you feel about what this might do for Cisco's opportunities with other networks, and also how you think this affects how the service router routing business will change for those when you sell directly to the operator. So do you think this makes Cisco stronger in that regard going in with Ericsson? Thank you.

Question: Tim Long - BMO Capital Markets - Analyst : Okay. Thank you.

Question: Francois Meunier - Morgan Stanley - Analyst : Hi, yes, the question Hans is probably what is the future for your current partnership with Ciena in optical and the one with Intel. Are those two partnerships compatible with the one you are announcing today?

Question: Francois Meunier - Morgan Stanley - Analyst : And what did you learn from the past partnerships you've done, you know with Ciena or Intel, to make this new bigger one, make sure it's going to work? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 09, 2015 / 1:15PM, ERICb.ST - Telefonaktiebolaget L M Ericsson and Cisco Systems Inc Partner to Create the Networks of the Future Corporate Call

Question: Francois Meunier - Morgan Stanley - Analyst : Thank you.

Question: Andreas Joelsson - DNB - Analyst : Hello and good afternoon. Just a clarifier from Hans maybe that the SEK1 billion in synergies is on top of the SEK9 billion that you have already announced. And from Cisco's side, what have you lacked before that you think that Ericsson could add in order to help you sell more products basically?

Question: Andreas Joelsson - DNB - Analyst : Thanks a lot. Very helpful.

Question: Ittai Kidron - Oppenheimer & Company - Analyst : Thanks. Congratulations to both of you. First question to Hans, going back to the cost cutting, you had talked about I understand that some of it has not been identified, but could you at least talk about what product areas you think might be somewhat redundant? I know you went into service recently. And then for Chuck, also for Hans, I'm sorry, you have a very important relationship with Juniper, a long-lasting one, 16 years if I remember correctly. How does that fit in the context of the Cisco relationship? And then for you Chuck, Hans clearly identified cost cutting opportunities, which were probably going to go to market and R&D. Are there no possibilities like that on your end? Are there no things that, where you see some overlaps with Ericsson that you might be able to turn off? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 09, 2015 / 1:15PM, ERICb.ST - Telefonaktiebolaget L M Ericsson and Cisco Systems Inc Partner to Create the Networks of the Future Corporate Call

Question: Ittai Kidron - Oppenheimer & Company - Analyst : Very good. Good luck, guys.

Question: Paul Silverstein - Cowen and Company - Analyst : Thanks. And I apologize. I know this question's been asked in previous forms, but given that you're projecting [$1 billion] in incremental revenue for each Company, I trust you all have already identified products that Ericsson will be reselling in the case of Cisco as well as the services that Ericsson will be providing in terms of its incremental revenue. Can you give us any insight in terms of routing, UCS hyper scale compute wireless win and price switching optical or other product markets that are contemplated by the agreement at this point in time? Again, I recognize it's early, but I'm sure you guys have already identified the products.

Question: Paul Silverstein - Cowen and Company - Analyst : And beside the customary customer testimonials, I saw the quotes out of Vodafone, Verizon, AT&T, I trust that you all have spoken to your customers extensively. Can you give us any incremental insight on the feedback you're getting?

Question: Alan Burkitt-Gray - Global Telecoms Business - Analyst : Hi. It's Alan Burkitt-Gray from Global Telecom's Business in London. Yes, when two companies come together, there's savings. What do you expect on the Ericsson side to lose in terms of R&D or in terms of product development or sales and marketing operations? Where will the efficiencies come from for Ericsson?

Question: Alan Burkitt-Gray - Global Telecoms Business - Analyst : Okay.