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Ericsson Ends CDMA Battle

Ericsson AB (Nasdaq: ERICY) has slammed the brakes on its Code Division Multiple Access (CDMA) network ambitions, culling 250 staff and giving up its fight for new business.

The Swedish equipment maker today announced plans to close its CDMA headquarters in San Diego. “Ericsson estimates that approximately 250 employees will be made redundant over the next 6-9 months,” notes a statement (see Ericsson Cuts CDMA Staff).

As a result of the move, Ericsson also expects to step back from future market battles. “We absolutely continue to support our existing customers when it comes to both R&D and customer support, but we will not aggressively look for new customers,” Pia Gideon, VP of market and external relations, tells Unstrung.

Ericsson is traditionally associated with the European-backed GSM (Global System for Mobile communications) and UMTS (Universal Mobile Telecommunications System) sectors, battling for the top spot with Finland’s Nokia Corp. (NYSE: NOK). The vendor raised eyebrows in 2002, however, by declaring its intention to win a top-three place and a 15 percent market share in the rival CDMA business -- a "spread-spectrum," digital, cellular air interface technology mainly used in the U.S. and South Korea (see Ericsson's CDMA Dreams and Ericsson Eats Into CDMA).

Such ambitions were initially met with a heavy dose of scepticism from analysts and rival vendors, but recent analyst reports suggested the company was on track to achieve its goal. A report from Nomura Holdings Inc. in October last year tipped the vendor to hit the 15 percent target by year's end (see Ericsson Nears CDMA Target).

Despite its market growth, Ericsson has failed to win CDMA network orders from major carriers in the U.S. market (see Ericsson's CDMA Cheer). “We have seen consolidation in the U.S. market so there is no longer as much potential there,” admits Gideon.

— Justin Springham, Senior Editor, Europe, Unstrung
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