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
Ericsson's Hyperscale Datacenter System (HDS) 8000, featuring Intel's Rack Scale Architecture, caused a stir when it was announced at MWC 2015. For more on this revolutionary product, join me on Thursday, April 30 at 12:00 p.m. EST for a Super Webinar event, A New Hardware Paradigm for the Telco Data Center.
LRTV Documentaries
CableLabs' Clarke Updates Cable Virtualization

4|23|15   |   05:41   |   (1) comment


Former BT exec now leading CableLabs' NFV and SDN efforts explains key role of open source and updates efforts to virtualize the home network.
LRTV Interviews
Ericsson's CTO Talks Transformation: Pt. II

4|23|15   |   08:19   |   (1) comment


In the second installment of an in-depth two-part interview, Ericsson's CTO Ulf Ewaldsson talks to Light Reading CEO and founder Steve Saunders about cultural change, network slicing and technology advances.
LRTV Interviews
Ericsson's CTO Talks Transformation: Pt. I

4|23|15   |   09:27   |   (3) comments


In the first installment of an in-depth two-part interview, Ericsson's CTO Ulf Ewaldsson talks to Light Reading CEO and founder Steve Saunders about the incredible transformation underway in the communications networking industry.
LRTV Documentaries
LTE Paves the Way for the 5G Revolution

4|20|15   |   4:20   |   (0) comments


Håkan Andersson, head of 5G product strategy of the Radio Business Unit at Ericsson, discusses the role of LTE, the US and other industry verticals in building a true 5G ecosystem.
LRTV Documentaries
The 3GPP's Road to 5G Standardization

4|17|15   |   4:43   |   (0) comments


Satoshi Nagata, chairman of the 3GPP's TSG-RAN group and a manager at NTT Docomo, explains the standardization process for 5G, as well as the biggest challenges and opportunities.
LRTV Documentaries
AlcaLu CTO Makes the Case for a New 5G Air Interface

4|16|15   |   3:54   |   (0) comments


Michael Peeters, CTO of wireless at Alcatel-Lucent, explains why 5G will require a new air interface to meet its diverse performance targets.
LRTV Documentaries
AlcaLu + Nokia: The New Uber-Vendor

4|15|15   |   2:42   |   (4) comments


Heavy Reading Senior Analyst Gabriel Brown discusses the technological and competitive opportunities and challenges if a merger between Alcatel-Lucent and Nokia comes to pass.
LRTV Huawei Video Resource Center
Huawei's Data Center Power Play

4|15|15   |   6:22   |   (0) comments


Huawei has developed industry-leading energy efficiency capabilities for its indoor and outdoor data center solutions, explains Dr. Fang Liangzhou, vice president of Huawei's Network Energy product Line.
LRTV Huawei Video Resource Center
Huawei’s Routers, Switches Get the Green Mark

4|15|15   |   2:02   |   (0) comments


TUV Rheinland's Frank Dudley explains how Huawei's routers and switches have been successfully tested by energy efficiency experts and have gained Green Mark Certification.
LRTV Documentaries
A Finn, a Frenchman & a Guy From New Jersey Walk Into a Merger...

4|15|15   |   3:17   |   (0) comments


Stop us if you've heard this one before... Light Reading CEO Founder & CEO Steve Saunders weighs in on the technical and cultural implications of a Nokia and Alcatel-Lucent merger.
LRTV Huawei Video Resource Center
Accounting for Better Solutions

4|10|15   |   02:31   |   (1) comment


Murad Yousuf, CTO at Saudi Arabia's Ministry of Finance (Dept. of Zakat & Income Tax), talks about the benefits of deploying router technology from Huawei.
LRTV Huawei Video Resource Center
What's in Store for Huawei & DataCore?

4|10|15   |   05:44   |   (0) comments


At the CeBIT trade show in Hannover, Germany, George Teixeira, CEO of software-defined storage (SDS) specialist DataCore Software, explains why he has just signed a partnership agreement with Huawei Technologies.
Upcoming Live Events
May 6, 2015, Georgia World Congress, Atlanta, GA
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
All Upcoming Live Events
Infographics
In its latest survey covering network operators' plans and strategies for ICT transformation, Heavy Reading asked telecom operators worldwide to identify the most important goals and objectives for their ICT transformation initiatives. Heavy Reading also asked operators about the importance of a "digital first" strategy, which enables customers to complete an interaction across different digital channels, such as web and mobile self-service and social media.
Hot Topics
Comcast Formally Ends Its Bid for TWC
Mari Silbey, Independent Technology Editor, 4/24/2015
What if the Comcast Merger Fails?
Mari Silbey, Independent Technology Editor, 4/20/2015
Google's WiFi-First Mobile Service 'Fi' Is Here
Dan Jones, Mobile Editor, 4/22/2015
Adtran Is Developing White Box GPON Tech
Ray Le Maistre, Editor-in-chief, 4/24/2015
Comcast Merger May Hinge on Hulu
Mari Silbey, Independent Technology Editor, 4/22/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Many leading communications companies can claim to have undergone significant periods of reinvention during their histories, but none have been through more major ...
Data Center Interconnect, or DCI, is one of the hottest sectors in telecom currently. Since coming back to Light Reading last year, prodigal-son style, I've ...
Cats with Phones
Learning Curve Click Here
Pierre could never remember how to use Excel.
Latest Comment