Ericsson may make Digital goodwill impairment after
revamp
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[December 08, 2017]
By Olof Swahnberg
STOCKHOLM (Reuters) - Ericsson said on
Friday it may have to book a goodwill impairment in its struggling
digital services and media businesses, potentially hitting the Swedish
mobile network equipment maker's operating income but not its cashflow.
Once the world's biggest manufacturer of mobile network gear, Ericsson
has been hit by competition from Huawei and Nokia while telecom operator
spending has slumped ahead of the roll-out of next-generation 5G
technology.
Ericsson, which has cut costs and reorganized in response, said a
restatement of its financials to reflect its new structure had uncovered
the potential need for impairments.

"If it turns out that we make an impairment of goodwill, we want to
stress that it would not be due to the business in the (fourth) quarter
but rather due to accounting matters," Ericsson's Chief Financial
Officer Carl Mellander told Reuters.
Ericsson said it will announce the outcome of its goodwill review before
it publishes its fourth-quarter report.
The segments Digital Services and Other, which houses its media
business, had around 20 billion crowns ($2.35 billion) in goodwill and
acquisition-related intangible assets in the third quarter, versus
around 45 billion for the group.
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Ericsson's flag is seen at the company's headquarters in Stockholm,
Sweden March 11, 2015. TT News Agency/Jonas Ekstromer/via
REUTERS/File Photo

Lars Soderfjell, portfolio manager at Alandsbanken who has no position in
Ericsson shares, said he was not surprised by the move given the performance of
the business.
Ericsson's Digital Services segment posted an operating loss excluding
restructuring costs of 6.9 billion crowns in the first three quarters of the
year while its Other segment made a loss of 4.1 billion crowns during the same
period.
Ericsson said an impairment would affect its operating income but not cashflow,
adding that its cash position was strong and its shares were up 0.1 percent by
0955 GMT.
This underperformed a 1.2 percent gain in the Stockholm blue chip index and a
1.1 percent rise in Nokia shares.
($1 = 8.5098 Swedish crowns)
(Reporting by Olof Swahnberg; editing by Niklas Pollard and Alexander Smith)
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