Swedish telecom company Ericsson (NASDAQ: ERIC) has suspended its Russian operations indefinitely. It has sent around 600 of its employees in the country on paid vacation.
Ericsson expects to record an impairment charge of $95 million in the first quarter of this year as a result of the decision.
Paolo Pescatore, an analyst at PP Foresight, said, “(This) move was inevitable following a swathe of sanctions.”
The company stopped deliveries in the transcontinental nation in February, following Russia’s invasion of Ukraine.
About Ericsson
Based out of Stockholm, Ericsson develops and manufactures communication network equipment, and provides telecommunication services and support solutions. The company employs around 100,000 people in more than 180 countries across the world.
ERIC stock lost 3.2% on Monday. It, however, gained 0.2% in the extended trading session to end the day at $9.37.
Consensus Rating
Based on three Buys and three Holds, Ericsson has a Moderate Buy consensus rating. ERIC’s average price target of $15.17 implies 62.3% upside potential from current levels. Shares have lost 31.2% over the past year.
Investors’ Stance
TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Ericsson, as nearly 10% of investors on TipRanks increased their exposure to the stock over the past 30 days.
Conclusion
The suspension of operations is also expected to hurt Ericsson’s future plans in Russia. This is because the company does not have a manufacturing plant in the country, and the Russian government will extend the licenses of only those telecom firms beyond 2023 that build networks using local equipment.
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