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Telefonaktiebolaget L M Ericsson ADR Class B ERIC

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Morningstar’s Analysis

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Ericsson Enters Communications API Space by Buying Vonage for $6.2 Billion; Lowering FVE to SEK 100

Mark Cash Senior Equity Analyst

Analyst Note

| Mark Cash |

We are lowering our fair value estimate for no-moat Ericsson to SEK 100/$11.10 from SEK 110/$12.80 after the company announced the acquisition of Vonage Holdings for $6.2 billion. Ericsson's shares ticked down about 6% on the news, which we view as healthy skepticism regarding the deal. The shares are fairly valued, in our opinion.

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Company Profile

Business Description

Ericsson is leading supplier in the telecommunications equipment sector. The company's three major operating segments are networks, digital services, and managed services. Ericsson sells hardware, software, and services primarily to communications service providers while licensing patents to handset manufacturers. The Stockholm-based company derives sales worldwide and had 95,000 employees as of June.

Torshamnsgatan 21, Kista
Stockholm, SE-164 83, Sweden
T +46 107190000
Sector Technology
Industry Communication Equipment
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 101,624