On Wednesday, Ericsson ERIC disclosed it would record a non-cash impairment charge of 11.4 billion Swedish krona ($1.1 billion) in the second quarter of 2024, which is in line with IFRS accounting standards.
The company expects the charges due to lower expected market growth rates in Vonage’s current portfolio.
Niklas Heuveldop, Head of Business Area Global Communications Platform and CEO of Vonage, said, “Given deterioration in the market environment and elective decisions we have made to refocus our investments in strategically prioritized areas, we have reassessed certain growth assumptions, resulting in a non-cash impairment of SEK 11.4 billion.”
“We continue to advance our strategy to build a Global Network Platform for network APIs, which was the strategic impetus for the Vonage acquisition.”
Notably, in 2021, Ericsson disclosed the buyout of Vonage Holdings for $6.2 billion. When it announced the deal, Ericsson expected the transaction to likely be accretive to EPS and free cash flow before M&A from 2024 onwards.
Last month, Ericsson disclosed the conclusion of the work and terms of the independent compliance Monitor appointed by the U.S. Department of Justice (DOJ) in June 2020.
In April, the company reported a sales decline of 15% Y/Y to SEK53.3 billion. In USD, sales of $5.13 billion missed the consensus of $5.34 billion. Ericsson reported an EPS of SEK 0.77 (+71% Y/Y). In USD, EPS of $0.07 beat the consensus of $0.05.
Price Action: ERIC shares closed lower by 0.16% at $6.19 on Wednesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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