2023-08-01 17:54:19 ET
Lumen Technologies ( NYSE: LUMN ) on Tuesday disclosed a nearly $9B goodwill impairment charge in Q2, triggered by a continued decline in its shares.
LUMN stock slumped 7.9% to $1.87 after hours.
Excluding the impairment charge and other items, the telecom firm reported Q2 earnings per share of $0.10 which beat estimates by 2 cents . Revenue slipped about 21% Y/Y to $3.66B, while coming in-line with consensus.
"The sustained decline in our share price during the second quarter was considered a triggering event requiring evaluation of goodwill impairment," LUMN said in a statement . Shares of the company fell 14.7% in Q2. Moreover, they have shed a whopping 61.1% YTD.
Based on its analysis, LUMN said it recorded a non-cash goodwill impairment charge of $8.8B.
"The goodwill impairment was driven by the difference between the company's market capitalization and the carrying value, primarily in its North America business reporting unit," Lumen ( LUMN ) added.
Notably, telecom stocks in general have been under pressure this month after a Wall Street Journal report claimed that companies such as AT&T ( T ), Verizon ( VZ ) and others have left behind a sprawling underground network of toxic lead cables across the U.S.
JPMorgan has named Lumen ( LUMN ) among companies likely to have "exposure" to potential copper lead sheathing liability.
LUMN said free cash flow, excluding special items, came in at -$896M in Q2, compared to $668M a year ago.
For FY 2023, LUMN reiterated its adj. EBITDA guidance of $4.6B to $4.8B and free cash flow outlook of $0M to $200M.
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Lumen discloses ~$9B goodwill impairment charge in Q2, stock slips 8% after hours