Ericsson + Telcordia: What the Analysts Say
With the dust settled on the news that Ericsson AB (Nasdaq: ERIC) intends to buy Telcordia Technologies Inc. for US$1.15 billion cash, what do Heavy Reading 's analysts make of the move? (See Ericsson to Buy Telcordia and Why Ericsson Wants Telcordia .)
Ari Banerjee, Senior Analyst, Heavy Reading
"Telcordia is being bought for roughly 1.5 times its revenue, so not a huge premium. The move gives Ericsson a better stronghold in the U.S. and Latin American markets. ... I want to see how successful Telcordia's assets are in Europe.
"Ericsson will now compete head-on with Amdocs and Oracle on the software side. Ericsson's OSS stack wasn't that impressive, but this makes them a formidable player in OSS and BSS as well as equipment. If Telcordia's assets can be integrated properly, then Ericsson can leapfrog other equipments vendors on the basis of their entire portfolio strength.
"The challenge will be in rationalizing a lot of duplicate assets and dealing with Telcordia's legacy solutions."
Caroline Chappell, Analyst At Large, Heavy Reading
"The multi-domain OSS is the bit that Ericsson didn't have -- its OSS was for Ericsson equipment only, so it needed a multi-vendor OSS capability both for customers wanting to manage heterogeneous networks and for its own internal purposes as a managed network services provider. This is the bright spot of the Telcordia portfolio -- the Granite inventory and Service Director service provisioning/assurance tool. Telcordia had already gone a long way toward closing the loop on provisioning and assurance, which is needed in a SON [self-organizing network]. Notably, Nokia Siemens Networks is working on the same capability.
"It will be interesting to see what Ericsson does with the BSS side of Telcordia, as it has significant duplication here, especially around charging. Telcordia's are the longer established products and Ericsson is behind rivals such as Alcatel-Lucent and Nokia Siemens on the next-generation IN [intelligent networking] side.
"Also, Ericsson had to give up its own SIP application server development, which it was working on jointly with Sun, as Oracle [which acquired Sun] wouldn't continue with it. But Ericsson already has a platform consolidation problem in the SDP [service delivery platform] area, even before the acquisition of yet another with Telcordia."
Berge Ayvazian, Senior Consultant, Heavy Reading
"The Telcordia acquisition will help Ericsson expand its fast-growing managed network services business and enter new segments, such as number portability."
Jim Hodges, Senior Analyst, Heavy Reading
"I see the skill set of the [Telcordia] employees and entrenched customer base as providing Ericsson an opportunity to expand its managed and professional services business in North America."
— Ray Le Maistre, International Managing Editor, Light Reading