© Reuters. FILE PHOTO: A logo of Ericsson is seen outside the company’s office in Kanata, Ontario, Canada April 17, 2023. REUTERS/Lars Hagberg/File Photo
STOCKHOLM (Reuters) -Telecom gear maker Ericsson (BS:) on 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.
($1 = 10.9458 Swedish crowns)
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