AXIS CommunicationsA world of intelligent networks

Third quarter 2001 CEO Peter Ragnarsson

CFO Jörgen Lindquist

Third quarter 2001

Axis is a profitable company

Highlights - EBIT

-54-45 -37 -41

-32 -39

1

-20

-70

-60-50

-40

-30

-20-10

0

10

q1-00 q2-00 q3-00 q4-00 q1-01 q2-01 q3-01

EBIT Structural

Ongoing operations

Highlights

Strengthened positions

Gross margins substantially improved

Overhead costs lowered

Air transport problems from terror attacks

Sales

Axis grows in weak IT-market Global company

Market positions

Product portfolio

Broad customer base

Distribution channels

Sales

Nine months 2001 Sales 487 Mkr (440)

Growth 11%

Negative impact in q3 from terror attacks 10 Mkr

Sales(proforma 2000)

50100150200250300350400450500550

q3 accum

SE

K m

Prev year Current year

Ongoing operations

Segments

Networked Office Professional buyers

Organizations >50 employees

Office connectivity OEM Industrial customers

Camera IT

Security / surveillance

Mobile Internet

Technology

Networked Office - q3 2001

Strategic segment

Profitable base

Negative impact from macro and terror attacks

Strengthened positions

Sales(proforma 2000)

0255075

100125150175200225250

q3 accum

SE

K m

Prev year Current year

Office Connectivity OEM - q3 2001

Continuous demand for built-in Axis solutions

Several major projects accounted for in q4-2001

Strong orderbook 2002

Sales(proforma 2000)

0

25

50

75

100

125

150

175

q3 accum

SE

K m

Prev year Current year

Camera - q3 2001

Digitalization

Increased security awareness

Launch Axis 2191 with audio module

Negative impact from terror attacks

Sales(proforma 2000)

0

25

50

75

100

125

150

175

q3 accum

SE

K m

Prev year Current year

Mobile Internet - q3 2001

Strategic area Wireless technologies

(WLAN, Bluetooth, etc)

Platform

Technology and market uncertainties

Sales(proforma 2000)

0,0

2,5

5,0

7,5

10,0

q3 accum

SE

K m

Prev year Current year

Technology - q3 2001

Increasing demand Industrial use

Several strategic customer contracts

Sales(proforma 2000)

0,0

2,5

5,0

7,5

10,0

q3 accum

SE

K m

Prev year Current year

Investing for the future

Intensive R & D agenda Nine month period 119 Mkr

Corresponding to ~20% of sales

Effects from terror attacks

Air transport problems More than 10 Mkr in shipments delayed

until October

Highlights q3 2001 - EBIT

Profitability despite effects from terror attacks

Highlights q3 2001 - Margins

4.8

Highlights q3 2001 - Expenses

48

EBIT by quarter (proforma 2000)

R&D overall 31 Mkr in q3-2001

New structure 20 Mkr restructuring

costs in q2-2001

Restructuring costs in q4 and q1 relates to Netch

Towards profitability as planned

EBIT by quarter (proforma 2000)

-57 -57 -55-62

-42-29

1

-10

-31

-20

-80

-70

-60

-50

-40

-30

-20

-10

0

10

q1-2000

q2-2000

q3-2000

q4-2000

q1-2001

q2-2001

q3-2001

SE

K m

EBIT Structural

ThinServer products - EBIT q3 2001

Profitability in focus Action program

reduces cost by 15%

EBIT level improved significantly

Action program impacts profitability from q3 and onwards

EBIT by quarter (proforma 2000)

-31

-11-7

1 0 1

16

-40

-30

-20

-10

0

10

20

q1-2000

q2-2000

q3-2000

q4-2000

q1-2001

q2-2001

q3-2001

SE

K m

Mobile Internet products - EBIT q3 -01

Intensive R&D Total investment in

q3-2001 10 Mkr (21)

Investment level reduced during 2001

EBIT by quarter (proforma 2000)

-14-19

-21

-34

-24 -25

-10

-40

-35

-30

-25

-20

-15

-10

-5

0

q1-2000

q2-2000

q3-2000

q4-2000

q1-2001

q2-2001

q3-2001

SE

K m

EBIT analysis q3-2001 (proforma q3-2000)

July-September 2001 July-September 2000

ThinServer products 16 -7

Mobile Internet -10 -21

Corporate functions -6 -8

SUB-TOTAL Axis excl Netch

1 -37

Netch - -18

TOTAL 1 -55

Sales – Q3

Sweden4%

EMEA39%

Americas33%

Asia24%

Gross margin

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

GM% 58.30% 52.70% 46.50% 48.20%52.90% 55.40%

Q2-00 Q3-00 Q4-00 Q1-01 Q2-01 Q3-01

Accounts receivables

0

20

40

60

80

Days of Sales Outstanding

DSO 67 55 76 57 64 56 53

Q1- Q2- Q3- Q4- Q1- Q2- Q3-

Inventory

0

10

20

30

40

50

60

70

80

90

Q1-00 Q2-00 Q3-00 Q4-00 Q1-01 Q2-01 Q3-01

Cash

020406080

100120140160180200

Q3-00 Q4-00 Q1-01 Q2-01 Q3-01

Market trends

Generally weak market conditions expected to remain at least until mid 2002

Axis 2001

Focus on network connectivity

Global presence

Industry insider

R&D portfolio

Established channels to markets

Track record

Outlook 2001

Profitable operations second half of year 2001

This is Axis

World-class solutions for easy-to-use,

secure and efficient communication over networks