Ericsson has confirmed a write down on a number of its assets alongside a tax charge, as it prepares to unveil its financials for 2017.
The vendor is writing down SEK14.2 billion (€1.44 billion) and is booking a non-cash tax charge of SEK1 billion (€102 million) that will hit its Q4 profits when they are revealed later this month.
It said in December that it expected extra charges as a result of a revised reporting structure that sees the company split into four units – Networks, Managed Services, Digital Services and Other, which includes TV and the IoT.
Digital Services, which CEO Börje Ekholm has identified as one of the key areas of the vendor's turnaround strategy, and Other are booking SEK13.8 billion, the vast majority of the charges.
These are largely related to goodwill assets that Ericsson said concern investments it made over 10 years ago.
There are also impairments related to managed services cancellations and network technologies that will no longer be used.
The tax charge relates to the reduction of US corporate income tax, which came into force earlier this month, and which hits Ericsson’s deferred tax assets.
Overall, the Swedish company said the write downs had “limited relevance” for its business going forward.
Nevertheless, they are a further blow to Ekholm who has said repeatedly that a return to profitability was his number one goal.
Ericsson made a loss of SEK16.2 billion in the first nine months of 2017, versus a profit on SEK3.5 billion the previous year.
The CEO is refocusing Ericsson on networks, digital services and the IoT as he looks to get the company back on track.
He has also rubber stamped several thousand job cuts and is looking to sell of Ericsson’s TV and media assets.
“The adjustments have no influence on Ericsson’s commitment to executing its strategies and to investing in technology to support customers’ success,” Ericsson said in a statement.