Light Reading

Matchmaking NSN

Ray Le Maistre
8/2/2012
50%
50%

7:05 AM -- Speculation about a potential merger between Alcatel-Lucent (NYSE: ALU) and Nokia Networks has increased again recently as both vendors try to restructure their way out of trouble. AlcaLu CEO Ben Verwaayen has countered that speculation this week as he discusses his company's current challenges. (See Alcatel-Lucent: Too Little, Too Late?)

But for those interested in NSN's future, you should check out the excellent analysis of potential suitors by Heavy Reading Senior Analyst Patrick Donegan. He argues that of all the possible partners -- including Ericsson AB (Nasdaq: ERIC) and Samsung Corp. -- NEC Corp. (Tokyo: 6701) is the most likely to make a move. There are a number of reasons why that makes sense. (See Who's Going to Buy NSN?.)

Donegan makes a great case for NEC from a macro-economic, cultural, historical and technology perspective. But, digging a bit deeper, there's another reason the NEC/NSN combination makes sense -- it's to do with Service Provider Information Technology (SPIT).

Modern communications equipment vendors can't get by with just great network equipment any more. They need a services (consultancy, systems integration, managed) element, strength in telecom software and IT systems (OSS, BSS, cloud platforms and so on) and global reach and scale.

The strong market leaders, Ericsson and Huawei, have recognized this -- that's why Ericsson acquired Telcordia. NSN also believes this: Its renewed focus is on mobile broadband systems, professional services and Customer Experience Management (CEM), an increasingly important strand in the SPIT sector.

But NSN's broader SPIT story lacks breadth, especially in terms of a broad OSS, BSS and cloud services support systems portfolio. As a major IT/cloud systems vendor, NEC would be a great parent to help NSN be a stronger IT transformation partner to communications service providers (CSPs).

And in building the telecom software side of its portfolio, NEC has shown an appetite for acquisitions. In June 2008 it bought OSS firm NetCracker for US$300 million and subsequently merged it with its existing telecom software assets to create a SPIT giant. Then a few months ago it splashed out $449 million to add billing, customer care and revenue management capabilities to its portfolio by acquiring Convergys Information Management. (See NEC to Buy Convergys Unit for $449M and NEC Shells Out $300M for NetCracker.)

NEC also has a strong mobile backhaul product line that would fill a hole at NSN, which sold its backhaul unit as part of its restructuring process. (See DragonWave to Buy NSN Unit.)

And it's a leading force in one of the most exciting areas of networking development -- software-defined networking (SDN). (See NEC Enhances OpenFlow-based SDN Fabric.)

There are, then, a number of factors that favor a NEC/NSN tie-up. As Donegan points out, such a move would "take a marked break in NEC's corporate culture," but as he also notes, stranger things have happened.

— Ray Le Maistre, International Managing Editor, Light Reading

(13)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
exon
50%
50%
exon,
User Rank: Light Beer
12/5/2012 | 5:25:03 PM
re: Matchmaking NSN


and the name is ALNSN? or maybe "bell labs" (seems to be the only thing left standing with some brand quality)....


anyway if you just consider the portfolios, they have many complementary parts, no doubt about that - NSN recent ditching of Juniper makes it more sensible too. but how on earth they are going to organize this monster (size-wise but mainly complexity-wise) and compete?


This could work if the management stays FAR away from Paris, if they dispose whole parts BEFORE they merge (i could think of the services alltogether to make for leaner organizations).


But who is going to engineer the deal? merkel and hollande?

yarn
50%
50%
yarn,
User Rank: Light Sabre
12/5/2012 | 5:25:02 PM
re: Matchmaking NSN


Another merger is the last thing that ALU or NSN needs right now. Management of both NSN and ALU needs to put their entire focus on stabilizing the patient and nursing it back to health.

FastCache
50%
50%
FastCache,
User Rank: Light Beer
12/5/2012 | 5:25:00 PM
re: Matchmaking NSN


Any of these M&A scenarios is likely to result in the accelerated demise of all concerned. Alcatel-Lucent continues to be in denial. Merging with someone else is hardly going to help the process of a turnaround.


Better to exit poorly performing businesses and to focus on true value creating ones.  Customers need to decide who are their strategic suppliers for each part of their network. Subscale players in any technology area cannot serve their customers with the sustained innovation required.

pdonegan67
50%
50%
pdonegan67,
User Rank: Light Sabre
12/5/2012 | 5:24:59 PM
re: Matchmaking NSN


Can't say I agree that any of these scenarios will likely lead to the acclerated demise of the acquirer. NEC and Samsung, for example, have a lot to gain from acquiring NSN's account footprint, and potentially some of their product line too. Neither firm has the scope to aggressively leverage price and financial terms as Huawei has done to break into so many accounts.

pdonegan67
50%
50%
pdonegan67,
User Rank: Light Sabre
12/5/2012 | 5:24:58 PM
re: Matchmaking NSN


Historically I would agree with you but I think Japan's business culture with respect to international M&A may be changing faster than you think.


The barriers to undertaking a huge deal of this kind are lower than they were a couple of years ago and they may be set to go lower still.


That doesn't make NEC a shoe-in for this deal. But it does means they are a much more plausible candidate for this than they would have been just two or three years ago.

paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:24:58 PM
re: Matchmaking NSN


At least the bit about culture.  The Japanese are really not big on any acquisitions and large ones are very out of the norm.


I think that breaking up these firms and selling off some pieces seems the right thing.  They don't seem to understand portfolion management at all.


seven


 

paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:24:56 PM
re: Matchmaking NSN


 


I would say that it might be so...and NEC would be the last buy that happens.  Imagine what happens at NSN when every senior manager in the company is fired to be replaced by a Japanese manager.  Should be a great sport to watch them wipe out the dirty gaijin.  :)


 


seven


 

pdonegan67
50%
50%
pdonegan67,
User Rank: Light Sabre
12/5/2012 | 5:24:53 PM
re: Matchmaking NSN


Can't agree with you there, I'm afraid. I can't see the bulk of NSN giving Cisco or Juniper anything much besides margin dilution.

allip
50%
50%
allip,
User Rank: Light Beer
12/5/2012 | 5:24:53 PM
re: Matchmaking NSN


NSN might be a good fir both Cisco and Juniper who have been gearing up to enter


the 4G wireless infrastructure market..

Soupafly
50%
50%
Soupafly,
User Rank: Light Sabre
12/5/2012 | 5:24:53 PM
re: Matchmaking NSN


What about Dimension Data?


Are they so outlandish......?

Page 1 / 2   >   >>
More Blogs from EuroBlog
Having taken a breather from its acquisition spree in the US, Zayo could kick-start some infrastructure consolidation action in Europe
Some good news for its Finnish parent – Nokia Siemens Networks is on a margin roll
Telefónica to boost its broadband lines in LatAm with DSL management the from ASSIA
According to the value of Nokia's takeover deal, Nokia Siemens Networks is worth less than $5B
As APAC and North America forge ahead, Europe seems stuck in yesteryear
Flash Poll
From The Founder
Network architects aiming to upgrade their networks to support agile, open, virtualized services in the 21st century need to consider new criteria when choosing between technology suppliers.
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
Wagner’s Ring
Business Value Trumps Moving Bits for Virtual Networks

7|7|15   |   01:22   |   (0) comments


At the recent Open Networking Summit, carriers described how they're focused on increasing revenue rather than just improving technology. This requires cultural changes, which can be more difficult than technology changes.
LRTV Custom TV
VeEX: Live from the Big Telecom Event 2015

7|7|15   |   2:28   |   (0) comments


VeEX's Carl Goldschmidt provides new product updates, including the RXT modular test platform and TX300s. With the latest technology in pluggable physical interfaces, the RXT platform combines multiple technologies with testing range from 10 Mbit/s to 100 Gbit/s. The TX300s is an "All-in-one" advanced multi-service test platform from 64 Kbit/s to 100 Gbit/s that ...
LRTV Custom TV
Light Reading Interviews MRV: 2015 Big Telecom Event

7|7|15   |   3:45   |   (0) comments


Scott St. John, SVP of Global Sales & Service, discusses MRV's customer-centric culture, the new OptiPacket OP-X1 100G access platform, and recent customer wins with Light Reading at BTE 2015.
LRTV Custom TV
Procera: Enhancing the Subscriber Experience

7|7|15   |   4:53   |   (0) comments


Hear from Procera on the latest in Subscriber Experience solutions. Learn how Procera's RAN Perspective technology helps network operators monitor and manage network traffic, in real-time, solving congestion and other network issues.
Between the CEOs
HP's Prodip Sen: The NFV Journey

7|7|15   |   21:39   |   (0) comments


Prodip Sen, CTO of the Network Functions Virtualization (NFV) business unit at HP, talks to Light Reading founder and CEO Steve Saunders about the four stages of the NFV journey.
LRTV Documentaries
Leading Lights 2015 Winners' Video

7|7|15   |   08:34   |   (2) comments


Hear what the Leading Lights 2015 winners had to say after they picked up their awards in Chicago.
LRTV Documentaries
PSA: The Perils of a Hyper-Connected Society

7|6|15   |   1:38   |   (0) comments


A public service announcement calling attention to the perils of a hyper-connected society.
LRTV Interviews
Guavus Takes Analytics on the Road

7|6|15   |   4:09   |   (3) comments


Guavus CEO Anukool Lakhina tells Light Reading CEO and founder Steve Saunders how the analytics tools developed for telcos are applicable to the transportation industry.
Telecom Innovators Video Showcase
Mellanox's New 25/50/100Gb/s Ethernet Products

7|6|15   |   2:44   |   (0) comments


Mellanox offers a complete 10/25/40/50/56/100Gbit/s solution that delivers industry-leading performance, scalability, reliability and efficiency for optimal application performance and data center ROI.
Telecom Innovators Video Showcase
Arista's CloudVision

7|6|15   |   6:01   |   (0) comments


Anshul Sadana answers questions from Steve Saunders, Light Reading’s founder and CEO, about Arista’s CloudVision, a global cloud network controller for workload orchestration and workflow automation delivering a turnkey solution for cloud networking.
LRTV Custom TV
Red Hat Demo

7|2|15   |   10:53   |   (0) comments


Red Hat's Nicolas Lemieux demonstrates how Red Hat is driving innovation through open source communities.
LRTV Custom TV
Red Hat's Approach to OpenStack Adoption

7|2|15   |   5:17   |   (0) comments


Red Hat's Radhesh Balakrishnan outlines his company's open source strategy for both enterprises and telcos.
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 16, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, The Westin Peachtree Plaza, Atlanta, GA
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
All Upcoming Live Events
Infographics
Equinix walks through the past four digital economy eras from computing to network to connected to today's interconneted world.
Hot Topics
What's a Gigabit Good For?
Carol Wilson, Editor-at-large, 7/1/2015
IBM Sows Seed for New Telco Unit, Plans NFV/SDN Push
Ray Le Maistre, Editor-in-chief, 7/6/2015
What the Helio? MVNO Is Back After First Flop
Sarah Thomas, Editorial Operations Director, 7/6/2015
FCC Chairman Talks Up SDN/NFV
Mari Silbey, Senior Editor, Cable/Video, 7/2/2015
A&E Launches Lifetime OTT Service
Alan Breznick, Cable/Video Practice Leader, 7/3/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Prodip Sen, CTO of the Network Functions Virtualization (NFV) business unit at HP, talks to Light Reading founder and CEO Steve Saunders about the four stages of the NFV journey.
Casa Systems has been going from strength to strength over the last couple of years. In 2013, it became the first vendor to ship an integrated CCAP device -- the ...
Cats with Phones