Ericsson (ERIC) Accused of Delaying the Recognition of Massive Expenses

According to the complaint, Ericsson (ERIC) overstated service revenues and improperly delayed the recognition of at least $1 billion in expenses on its long-term service projects while representing that its financial statements were prepared in accordance with International Financial Reporting Standards. After many years of reporting misleading financial information, Ericsson began to reveal the truth on April 21, 2016, when the company announced disappointing results for the first quarter ended March 31, 2016, due to weak revenues from service projects. The company continued to report poor financial results for the second and third quarters of 2016, again blaming weak revenues from service projects and higher-than-expected costs. On July 18, 2017, Ericsson revealed that it identified 42 long-term service contracts to date with total annual sales of almost $1 billion that Ericsson would exit, renegotiate, or transform. Since Ericsson's troubles became known to investors, Ericsson's American Depositary Share price has fallen over 35% to close at $6.33 per share on April 16, 2018.

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