Walgreens, Lumen, Truist, and Verizon among companies with largest impairments
- Interest rates are expected to remain higher for longer, leading to more goodwill write-downs
- Companies such as Walgreens, Lumen, Truist, and Verizon have taken some of the largest impairments in the past year
- Impairments are tied to acquisitions made when interest rates were low
- Pretax goodwill impairments totaled $82.9 billion across 353 U.S. public companies in 2023
- Impairments are stabilizing at a higher level due to higher interest rates
- Companies can offset higher rates with investments in AI and cost cuts
Interest rates are expected to remain higher for longer, leading to an increase in goodwill write-downs for companies. Walgreens, Lumen, Truist, and Verizon are among the companies that have taken some of the largest impairments in the past year. These impairments are tied to acquisitions made when interest rates were low, and the increased cost of capital has reduced the value of these businesses. In 2023, pretax goodwill impairments totaled $82.9 billion across 353 U.S. public companies, down from $136.2 billion in 2022. However, impairments are stabilizing at a higher level due to the impact of higher interest rates on companies’ cost of capital. Companies can offset the higher rates by making investments in artificial intelligence and implementing cost-cutting measures. Overall, if interest rates remain high, U.S. goodwill impairments are expected to be similar in dollar volume to last year.
Factuality Level: 8
Factuality Justification: The article provides detailed information about the impairments faced by several companies due to higher interest rates and their impact on goodwill. It includes specific examples, figures, and expert opinions to support the claims made. The information is presented objectively and without sensationalism or bias.
Noise Level: 3
Noise Justification: The article provides a detailed analysis of how higher interest rates are leading to significant goodwill impairments in various companies. It explains the impact of interest rates on the value of businesses and how companies are adjusting their financial expectations. The article includes specific examples of companies like Walgreens, Lumen Technologies, Truist Financial, and Verizon Communications facing substantial impairments. It also discusses historical data on impairments and future expectations based on interest rates and economic conditions. Overall, the article stays on topic, supports its claims with evidence and examples, and provides valuable insights into the financial implications of interest rate changes.
Financial Relevance: Yes
Financial Markets Impacted: The article discusses impairments taken by companies such as Walgreens Boots Alliance, Lumen Technologies, Truist Financial, and Verizon Communications. These impairments are a result of higher interest rates, which increase corporate interest expenses and reduce the value of businesses. The impairments impact the financial performance and balance sheets of these companies.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article does not describe any extreme events. It focuses on the financial impact of higher interest rates on companies and their impairments.
Public Companies: Walgreens Boots Alliance (WBA), Lumen Technologies (LUMN), Truist Financial (TFC), Verizon Communications (VZ)
Key People: Manmohan Mahajan (Finance Chief)
Reported publicly:
www.wsj.com 
