Ericsson unveils $3 billion charge and downbeat sales outlook, and stock takes a dive
The U.S.-listed shares (ERIC) (SE:ERIC.B) of Ericsson accelerated to the downside in afternoon trading Wednesday, after the Sweden-based maker of telecommunications equipment said it would record a third-quarter impairment charge of 32 billion Swedish krona attributed to the Vonage acquisition. The stock down 0.6% just before the announcement, then fell as much as 3.5% to an intraday low of $4.68 after the announcement, before paring losses. The stock was last down 2.0%. The non-cash charge, the equivalent of about $2.93 billion, "is a consequence of the significant drop in the market capitalization of Vonage's publicly traded peers, increased interest rates and overall slowdown in Vonage's core markets," the company said in a statement. Ericsson's $6.2 billion acquisition of Vonage had closed in July 2022. The company said it expects third-quarter sales of SEK64.5 billion, below the current FactSet consensus of SEK67.2 billion. The company is slated to report results on Oct. 17. The stock has dropped 18.6% year to date, while the S&P 500 has gained 13.5%.
-Tomi Kilgore
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10-11-23 1426ET
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