Rumor: Ericsson to Buy LG-Nortel Stake

Is Ericsson AB (Nasdaq: ERIC) about to buy another item at the Nortel Networks Ltd. fire sale?

According to a report in the Seoul Economic Daily, the Swedish firm is set to buy a controlling stake in the LG-Ericsson Co. Ltd. joint venture.

Nortel currently owns a 50 percent-plus-one-share stake in the venture, with the remainder owned by South Korean giant LG Electronics Inc. (London: LGLD; Korea: 6657.KS) . Nortel has been looking to offload its stake since May last year. (See Nortel Offers Up Its LG-Nortel Stake.)

The Korean newspaper report suggests an announcement could be made as soon as tomorrow.

Ericsson said it couldn't comment on rumor or speculation, and declined to say whether the report was accurate or not.

Ericsson has been cherry-picking the Nortel assets it fancies during the past year, having snapped up the Canadian vendor's CDMA and Long Term Evolution (LTE) business for $1.13 billion in July 2009, and the North American part of Nortel's GSM business for $70 million in November last year. (See Ericsson Buys Nortel's GSM Biz Too, Nortel Wireless Winner: It's Ericsson!, and Ericsson Delivers Knockout Blow to NSN.)

LG-Nortel generated $644 million in revenues in 2009 from its range of IP phones, unified communications platforms, VoIP systems, fiber-to-the-home gear (WDM PON), and wireless and optical infrastructure products. (See LG-Nortel Demos WDM-PON Ecosystem.)

— Ray Le Maistre, International Managing Editor, Light Reading