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Ericsson to Buy Telcordia

Ray Le Maistre
6/14/2011
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So the rumors were true! (See Telcordia Acquired?)

Ericsson AB (Nasdaq: ERIC) is to acquire Telcordia Technologies Inc. for US$1.15 billion in cash, the Swedish vendor announced Tuesday. (See Ericsson to Acquire Telcordia.)

The move will make Ericsson one of the biggest Service Provider Information Technology (SPIT) vendors in the global market when the deal closes, as it will add its existing OSS and BSS capabilities to Telcordia's extensive suite of software products and services that generated revenues of $739 million in the 12 months to Jan. 31, 2011.

About 2,600 staff will join Ericsson as part of the deal, which, says the European giant, "reinforces and expands Ericsson's position as [a] leading player in [the] operations support systems/business support systems (OSS/BSS) market with key position in service fulfilment, assurance, network optimization and real-time charging."

Ericsson's CEO Hans Vestberg noted in the official news announcement that "the importance of operations and business support systems will continue to grow as more and more devices are connected, services become mobile and new business models for mobile broadband are introduced. In this context, Telcordia brings very skilled people and knowledge, a large business in North America and other markets, as well as a good multi vendor product portfolio."

Light Reading reported industry speculation in early May that Telcordia was in the process of being acquired, though at that stage the identity of the buyer was unknown.

Subsequent industry gossip pointed to HP Inc. (NYSE: HPQ) as the likely buyer, but that speculation proved wide of the mark. (See Telcordia's Suitor Identified.)

Talk that Telcordia was once again on the block surfaced earlier this year, prompting an examination of the company's business and the question, What's Telcordia Worth?

— Ray Le Maistre, International Managing Editor, Light Reading

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upand2theright
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upand2theright,
User Rank: Light Beer
12/5/2012 | 5:02:03 PM
re: Ericsson to Buy Telcordia


$1.15 billion for a company with $780M in revenues?   Investors are not getting a boost on that deal, Ray.  I smell a competitive bid coming.

digits
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digits,
User Rank: Light Beer
12/5/2012 | 5:02:02 PM
re: Ericsson to Buy Telcordia


Ericsson's share price in Stockholm is up 1.6% to SEK88.65 following the news.   

digits
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digits,
User Rank: Light Beer
12/5/2012 | 5:02:02 PM
re: Ericsson to Buy Telcordia


That's an interesting suggestion! WHo do you think might pitch in with a higher bid though? It seems plenty of cmompanies have run the ruler over Telcordia and Ericsson's offer might just be the best the owners are going to get.


 


I think if you looked at how much cash the current private equity owners have managed to take from their Telcordia asset during the past 6 years then the ROI on the deal for them would look far bettr than just a $1.15b cash in the bank from ERIC.


Just a guess - I have no financials I am basing that on... 


 

paolo.franzoi
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paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:02:02 PM
re: Ericsson to Buy Telcordia


 


How about Alcatel?


E has been shut out of a lot of AT&T business because they are not in the OSS environment built by ALU.  Alcatel seems to slip that part of the OSS all the time.  Perhaps this is a way in or a way to put pressure on ALU.


seven


 

digits
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digits,
User Rank: Light Beer
12/5/2012 | 5:02:01 PM
re: Ericsson to Buy Telcordia


This is certainly a game-changer in terms of the USA vendor competitive positioning as it should in theory:


 


-- put pressure on ALU as you mention -- ERIC will have a direct 'in' through Telcordia's legacy assets


-- be a further pain in the side of NSN which has bene hoping its Moto deal would give it gtreater leverage in the USA. ERIC is kinda trumping that with this move.


-- make it even harder for Huawei to make any sort of m,ajor impression in USA, not that it was going to have an easy time to start with


-- gives IBM, HP, Amdocs and others something to think about in terms of back office transformation opportunity cmopetition -- ERIC managed services + Telcordia OSS smarts is an  interesting combo

digits
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digits,
User Rank: Light Beer
12/5/2012 | 5:02:01 PM
re: Ericsson to Buy Telcordia


Up 2.4% to $14.07... 

jayja
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jayja,
User Rank: Light Sabre
12/5/2012 | 5:01:58 PM
re: Ericsson to Buy Telcordia


FOC testing, GR's etc.  How can Eircsson run that business when they are a prospective client?

digits
50%
50%
digits,
User Rank: Light Beer
12/5/2012 | 5:01:50 PM
re: Ericsson to Buy Telcordia




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They get fast-tracked?


Kidding....


&nbsp;


I imagine there may need to be some ring-fencing or spin-oofs amongst the jumble that is Telcordia... Imagine what this could have been like when OSMINE was in full swing?!&nbsp;

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