Ericsson books write-downs of 14.2 billion kronor

Lloyd Doyle
January 19, 2018

Swedish mobile network gear maker Ericsson (ERICb.ST) booked an impairment of 14.2 billion crowns ($1.8 billion) in the fourth quarter, related primarily to goodwill in its digital and media operations, hitting operating income but not cashflow.

Ericsson on Tuesday said it would write down 14.2 billion Swedish kronor (€1.4 billion, $1.8 billion) in assets as the company struggles to compete in a rapidly changing sector.

"The impairments and the tax asset revaluation will impact reported net income in 4Q 2017, but have no impact on Ericsson's cash flow and cash position in 4Q 2017", it said.

In the third quarter of 2017, Ericsson posted a net loss of 4.4 billion kronor and booked its fourth-straight operating loss, after being hit by a range of factors including higher development and hardware costs.

It said in December that it expected extra charges as a result of a revised reporting structure that sees the company split into four units - Networks, Managed Services, Digital Services and Other, which includes TV and the IoT.

According to Ericsson, the majority of goodwill originates from the investments made by it ten years ago or more, and has limited relevance for the company's business going forward.

The tax charge relates to the reduction of United States corporate income tax, which came into force earlier this month, and which hits Ericsson's deferred tax assets.

In addition, the lowering of the U.S. corporate income tax rate from 35 to 21 percent from the start of this year requires a writedown in the value of the company's United States deferred tax assets.

Other reports by Iphone Fresh

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