Ericsson Takes $1.1 Billion Hit on Weak Vonage Outlook

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Ericsson announced on Wednesday that it will incur a noncash impairment charge of 11.4 billion Swedish crowns ($1.09 billion) in the second quarter of 2024, marking its second writedown related to the acquisition of Vonage.

The impairment charge reflects revised growth expectations in certain segments of Vonage’s existing portfolio, Ericsson stated in a press release.

The Swedish telecommunications equipment manufacturer acquired Vonage, a cloud communication firm, in 2022 for $6.2 billion. “Given the changing market dynamics and strategic decisions to reallocate our investments to key priority areas, we have reevaluated certain growth projections,” explained Niklas Heuveldop, CEO of Vonage.

Heuveldop emphasized that Ericsson remains committed to its strategy of developing a Global Network Platform for network application programming interfaces (APIs), which was the primary rationale behind acquiring Vonage earlier.

This latest impairment charge follows Ericsson’s 2023 announcement of a 32 billion Swedish crown impairment charge related to the Vonage acquisition.

Initially, Vonage was slated to operate independently within Ericsson. Earlier this year, Heuveldop assumed the role of Head of Business Area Global Communications Platform and CEO of Vonage.

($1 = 10.4934 Swedish crowns)