Ericsson detailed an SEK32 billion ($2.9 billion) charge relating to an acquisition of cloud company Vonage in 2022, as it issued an update on its Q3 earnings ahead of a formal announcement on 17 October.

The vendor stated the charge relates to an impairment of goodwill surrounding the acquisition and will be reported within its Enterprise business unit.

It explained the charge “is a consequence of the significant drop in the market capitalisation of Vonage’s publicly-traded peers, increased interest rates and overall slowdown” in the cloud company’s core markets.

The impairment charge “represents 50 per cent of the total amount of goodwill and other intangible assets attributed to Vonage”.

Ericsson emphasised Vonage remained key to its expansion strategy for the enterprise sector.

Update
The vendor issued a preliminary forecast of a 5 per cent year-on-year drop in net sales to SEK64.5 billion, with a 14 per cent decline in network revenue offsetting gains in cloud, software and services; and its Enterprise unit.

It noted a 60 per cent drop in organic sales in North America, highlighting the comparable period of 2022 was a “record” and the decline was “partly offset” by gains in India in the recent quarter.

No profit figures were offered in the preliminary numbers, but Ericsson noted a 39 per cent fall in EBITA to SEK4.7 billion.