Why Ericsson Stock Is Gaining Today

Why Ericsson Stock Is Gaining Today
  • Ericsson ERIC shared its readiness to make a provision of SEK 2.3 billion ($220 million) about a possible resolution with the U.S. Department of Justice (DOJ) regarding non-criminal, alleged breaches under its 2019 Deferred Prosecution Agreement (DPA).
  • Ericsson will book this charge in its fourth quarter 2022 financial results.
  • Ericsson's internal investigation and cooperation with authorities regarding the 2019 Iraq-related internal investigation report remain open and ongoing.
  • Also Read: Ericsson Recognizes $76M Charge To Drive Profitability In Cloud Software And Services
  • In 2019, Ericsson entered into the DPA to resolve past (before 2017) Foreign Corrupt Practices Act (FCPA) violations relating to misconduct in certain countries.
  • In October 2021 and March 2022, the DOJ notified Ericsson that it failed to provide documents and information to the DOJ promptly and did not adequately report certain information relating to a 2019 Iraq-related internal investigation.
  • The update indicates that a resolution is nearer than the market expected, which removes much of the overhang to the investment case, Danske Bank Credit Research analyst Mads Lindegaard Rosendal said, Reuters reports.
  • "The provision is significantly below both our and S&P's base case of about 10 billion SEK," he said.
  • Price Action: ERIC shares traded higher by 7.83% at $6.47 in the premarket on the last check Thursday.

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