Ericsson Books $2.9 bln Impairment, says Q3 Core Profit Fell 39%

Telecom gear maker Ericsson Wednesday announced a 32 billion Swedish crowns ($2.9 billion) impairment charge related to its acquisition last year of Vonage, and said core profits tumbled in the third quarter.

Ericsson bought Vonage in a $6.2 billion deal.

"The impairment charge represents 50% of the total amount of goodwill and other intangible assets attributed to Vonage," the Swedish group said in a statement.

"The impairment is a consequence of the significant drop in the market capitalisation of Vonage's publicly traded peers, increased interest rates and overall slowdown in Vonage's core markets," it added.

Ericsson said a preliminary reading showed its operating profit before amortisation and restructuring and impairment charges fell 39% in the quarter to 4.7 billion crowns, on a 5% drop in sales to 64.5 billion.

The group, which is scheduled to publish its full quarterly earnings report on Oct. 17, said it expected an operating margin of 7.3% before amortisation and restructuring charges, in line with previous guidance.

October 13, 2023