Ericsson Announces Write Downs and US Tax Reform Charge

Ericsson AB will book a 14.2 billion Swedish kronor ($1.76 billion) writedown and a SEK1 billion U.S. tax charge in the fourth quarter, it said Tuesday.

After completing impairment testing in conjunction with the telecommunications-equipment company's new structure, Ericsson said the impairments will hit fourth-quarter operating income mainly in its digital-services unit.

"The adjustments have no influence on Ericsson's commitment to executing its strategies and to investing in technology to support customers' success," it said in a statement.

In addition, the recent cut to the U.S. corporate income tax rate to 21% from 35%, which went into effect Jan. 1, has required a revaluation of U.S. deferred tax assets. Ericsson said the current estimated impact will be a noncash charge to the group income statement of around SEK1 billion and will impact income-tax expenses.

"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. "Ericsson's gross and net cash position remain strong."

The figures announced Tuesday are unaudited, and final numbers will be published in the company's fourth-quarter report, due to be released on Jan. 31.

Write to Dominic Chopping at dominic.chopping@wsj.com; Twitter: @domchopping @WSJNordics

(END) Dow Jones Newswires

January 16, 2018 03:14 ET (08:14 GMT)