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Ericsson said in a statement on Tuesday that it has agreed to acquire Telcordia Group of Piscataway, NJ, with its investors Providence Equity Partners and Warburg Pincus. Telcordia's 2,600 employees will be transferred to Ericsson. Telcordia is a leading provider of fixed-line, mobile, and broadband communications software and services.
Hans Vestberg, Ericssonâ€™s CEO, once predicted that 50 billion devices will be connected to the Internet worldwide by 2020, which poses enormous challenges for operators and system suppliers. Wei Hanshen told Reuters: â€œWe will definitely become the leader in many different fieldsâ€ and said Telcordiaâ€™s market is very fragmented.
Affected by this news, Ericsson's stock price rose 1.7% to 88.70 SEK/share.
The Swedish company stated that the global software and systems integration market is approximately 35 billion U.S. dollars, and the compound annual growth rate from 2010 to 2013 is expected to be 6-8%. Wei Hansi said: "With more and more devices connected to the network, service mobilization and the introduction of new mobile broadband business models, the importance of operations and business support systems will continue to grow."
He said: "In this regard, Telcordia has high-skilled personnel and knowledge, in North America and other markets with huge business and a good multi-vendor product portfolio." Ericsson expects the transaction to be completed in the fourth quarter of this year, starting to play its full role from the first quarter of next year, and will increase Ericsson's earnings per share within 12 months.
Richard Windsor, a global technology expert at Nomura Securities, an investment bank, believes that â€œtransactions will help increase the attractiveness of Ericssonâ€™s services and make it difficult for Huawei or ZTE to compete. Ericsson seems increasingly powerful in this regard.â€
But he said: "The biggest question is whether Ericsson is over-bidding. They have had such precedents, for example, in the acquisition of Marconi and Redback."
AR111 Power LED, AR111 LED, AR111 GU10 LED, AR111 LED Spotlight
Eversatis International Co., Ltd , http://www.eversatislight.com