Telecommunications company, Ericsson, is taking yet another write-down of almost $2 billion as the troubled broadband service provider struggles to compete with new trends.
Ericsson has had a rough down slide in recent years, as a slump in its core network business has led to several profit warnings and the ousting of its chief executive. Internationally, Ericson continues to lose market share to its competitors Huawei and Nokia.
Early last year, the Swedish network gear maker took up to SKr15bn of charges — one of the biggest write-downs in Swedish corporate history — due to problems with certain contracts. The company’s second quarter revenue dropped 11% and both sales and profit were below expectations.
As Ericsson attempts to divest its digital service and media businesses—the branch responsible for providing services for television channels, providing content as well as providing cloud and physical devices for internet of things— it is writing down.
The company stated that it would take write-downs of $1.8bn after impairment testing of its businesses. The company also noted that it will suffer a SKr1bn ($125m) non-cash charge due to the recent US tax reform.
Like many other telecommunication companies who are reducing their spending in preparation of the latest 5G network, Ericsson is also cutting its spend. But asides that, investments made over 10 years ago has limited relevance for Ericsson businesses and has impeded its growth, the company stated.