If telecom infrastructure is your game, you'll want to get up very, very early on Thursday. Why? Because Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) reports earnings at 8:30 a.m. -- local time in Sweden. New Yorkers have to get up at 2:30 in the morning, while the Hollywood hot-shots can just stay up 'til 11:30 Wednesday.

Whether you're catching it early or late, it's good to know what you're in for, so here's the Foolish lowdown. You can start with a look back at the last earnings report.

What Fools say:
Here's how Ericsson's CAPS scoring rates against some of its peers and competitors:

Market Cap (billions)

CAPS Rating

Bull Ratio

Cisco Systems (NASDAQ:CSCO)

$189.0

*****

95%

Nokia (NYSE:NOK)

$148.1

****

91%

Ericsson

$46.9

***

89%

Alcatel-Lucent (NYSE:ALU)

$20.9

**

68%

Nortel Networks (NYSE:NT)

$7.1

*

69%

Data taken from Motley Fool CAPS on Oct. 23, 2007.

Oh my, what a nice starry stepladder. Stairway to heaven or economies of scale? You decide.

Both fans and detractors of Ericsson have plenty to say. One All-Star bear cites recent news (more on that in a minute) and points to "symptomatic problems with [Ericsson] which are not likely to correct themselves until some internal reorganization takes place."

The bulls are looking at the same news and view last week's dramatic share price drop as an opportunity. "Buffett said something about using other investors' greed and fear to your advantage," says one player. "Fear created a nice entry point in this company. Let's see how it goes." Cries of exaggerated doom and gloom and an overreacting market set the tenor of the bull position.

What management says:
OK, so here's the news we were talking about. Last week, Ericsson's management released preliminary results for the third quarter, and it just wasn't pretty. Sales should be SEK 43.5 billion (or about $6.8 billion at today's exchange rate), net income looks like SEK 5.6 billion or $870 million, and operating cash flow will be negative.

All of those figures are way below earlier guidance as well as Wall Street expectations, and the warnings come just a couple of weeks after we saw a glowing management outlook at Ericsson's analyst day. In other words, the subsequent price drop may be more about management credibility than about the numbers themselves.

What management does:
For once, we get to see the current numbers reflected in our trend tables. This quarter puts an end to rising net margins, and if we assume (quite charitably) zero capital expenses this quarter, a trailing 6.6% free cash flow margin will end another encouraging trend line.

Margins

6/2006

9/2006

12/2006

3/2007

6/2007

9/2007

Gross

43.6%

42.8%

41.2%

41.2%

41.3%

44.1%

Operating

17.7%

18.0%

15.4%

15.5%

15.5%

14.3%

Net

14.5%

14.7%

14.8%

15.2%

15.4%

13.9%

FCF/Revenue

7.5%

10.0%

8.2%

8.9%

11.5%

N/A

Growth (YOY)

6/2006

9/2006

12/2006

3/2007

6/2007

9/2007

Revenue

17.8%

17.3%

17.1%

12.8%

10.2%

9.5%

Earnings

18.2%

17.2%

8.0%

13.3%

16.8%

3.6%

Data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
OK, so this quarter will look weak thanks to lower sales of network upgrades than Ericsson had expected. But CEO Carl-Henric Svanberg also told the press that the outlook for 2008 was equally dark, and that goes for "the sector as a whole. We won't comment on Ericsson's net margins for next year."

Ericsson grew its workforce by 34% over the past two years, or 17,000 employees. When times were good, nobody questioned that growth because it matched the sales and earnings trends. Now, the Swedish press and analyst corps are calling for cuts to match the new reality.

This Fool would agree with the CAPS bulls -- yes, it's a material change in the business, and some of the drop may be justified. But Mr. Market took it too far. We're looking at a trailing P/E ratio around 12 today, compared to 18 a year ago, 18 for Nokia today, and 33 for Motorola (NYSE:MOT). In other words, Ericsson looks like a dirt cheap dream stock.

Sign up for a free CAPS account to find the identities of your fellow Fools who were quoted above. They might have more to tell you!

Fool contributor Anders Bylund holds no position in any of the companies discussed here -- and he has been sorely tempted by some of them. You can check out Anders' holdings if you like, and Foolish disclosure is the prognosticator of prognosticators.