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DWDM

Is Ericsson Exiting Optical?

Sources in Europe say Ericsson AB (Nasdaq: ERICY) is halting development on its optical networking products, including its ERION line of DWDM metro and long-haul transport gear.

"They appear to think it's common knowledge," says one financial manager, who asked to stay unnamed.

Other sources close to Ericsson say the company has already signed a deal to OEM a line of DWDM gear from Marconi PLC (Nasdaq/London: MONI) but has held off announcing anything due to concern over Marconi's financials.

Sources say the deal makes sense from Ericsson's viewpoint since Ericsson already OEM's SDH gear from Marconi through a contract signed four years ago.

Ericsson, as ever, is tight lipped. "We are constantly reorganizing," says spokesman Mads Madsen. He refuses to confirm or deny what he calls "speculation" about the company's optical products or any possible deal with Marconi.

Marconi too won't respond to rumor regarding Ericsson.

But there's this: The systems division at Ericsson, of which all the company's telecom products are part, saw a 40 percent reduction in revenues during the first quarter of this year, compared with last year's first quarter (see Ericsson Reports $290M Loss).

Ericsson's regrouped its Mobile and ENGINE core and access systems into a new business unit (see Ericsson Reorganizes). The company says present opportunity lies in services and equipment to help carriers -- particularly ones with wireless facilities -- move circuit-switched legacy networks to packet-based ones, using Ericsson's ENGINE gear, which includes broadband circuit-based switches, access equipment, and ATM gear.

But ERION products have gone unmentioned, left out of the lifeboat.

Ericsson confirms the ERION products weren't put into the new group with the ENGINE and mobility gear but instead have remained under its transport and transmission networks division.

Meanwhile, it's been well over a year since the last publicized contract win for ERION, with Finland's incumbent carrier Sonera Corp. Separately, Ericsson is also said to be mulling the sale of its other optical division, Ericsson Network Technologies, which is part of its "other operations" group and specializes in fiber optic cabling and telecom network installation and integration (see Ericsson May Jettison Troubled Units).

— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com
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scooby 12/4/2012 | 10:23:08 PM
re: Is Ericsson Exiting Optical? Smart move. It's too bad Nortel can't execute on this strategy as well. Apparently Paul Simon wrote their business plan, however.
xoip 12/4/2012 | 10:23:07 PM
re: Is Ericsson Exiting Optical? Aren't they exiting Enterprise as well ?
XoIP
xoip 12/4/2012 | 10:23:06 PM
re: Is Ericsson Exiting Optical? Aren't they exiting Enterprise as well ?
XoIP
belas_knap 12/4/2012 | 10:23:05 PM
re: Is Ericsson Exiting Optical? Before I receive a plethora of posts on this one - the phrase should have read "Metro-DWDM deployments for SPs....."

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I received this a couple of weeks ago through a contact- chances are this story is true (note, this is just an extract & I can't officially validate the source). To be quite honest, this isn't really a big surprise - DWDM for the SPs in Europe is not great ($50-M market excluding managed services ?) and Ericsson only have a handful of customers (mainly all based around Sonera) which would make a lot of sense to give up & partner with externally.

"Due to the present market situation for Optical Networks we are obliged to adjust the optical strategy within BTTN, affecting the scope of our operations. We have decided to close down our own optical - DWDM development. Affected personnel are mainly located in Kungens Kurva, Sweden. ....The adjustment of our strategy means that our own DWDM development will be closed, leading to staff redundancies. All Optical Networks' products will be sourced, and we will focus our own resources on Technical Sales Support, Solutions, Product Management, and Supply."
belas_knap 12/4/2012 | 10:23:05 PM
re: Is Ericsson Exiting Optical? I received this a couple of weeks ago through a contact- chances are this story is true (note, this is just an extract & I can't officially validate the source). To be quite honest, this isn't really a big surprise - DWDM for the SPs in Europe is not great ($50-M market excluding managed services ?) and Ericsson only have a handful of customers (mainly all based around Sonera) which would make a lot of sense to give up & partner with externally.

"Due to the present market situation for Optical Networks we are obliged to adjust the optical strategy within BTTN, affecting the scope of our operations. We have decided to close down our own optical - DWDM development. Affected personnel are mainly located in Kungens Kurva, Sweden. ....The adjustment of our strategy means that our own DWDM development will be closed, leading to staff redundancies. All Optical Networks' products will be sourced, and we will focus our own resources on Technical Sales Support, Solutions, Product Management, and Supply."
wilecoyote 12/4/2012 | 10:23:04 PM
re: Is Ericsson Exiting Optical? Ericsson has had this division on the block for almost a year now. They are selling their access division, or closing it down, as well.
belas_knap 12/4/2012 | 10:23:04 PM
re: Is Ericsson Exiting Optical? This is good news. Maybe revenues from the album sales will help to bolster up the c**p margins on the optical gear......
Homeward Bound !

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Apparently Paul Simon wrote their business plan, however.
zweisel 12/4/2012 | 10:22:55 PM
re: Is Ericsson Exiting Optical? it is old news yet good news given that the industry should have less players in it so the remaining ones can actually start to make some cash. the remaining carriers should start buying the defunct carriers and then shut down their capacity to be able to raise prices.
dave77777 12/4/2012 | 10:22:55 PM
re: Is Ericsson Exiting Optical? That's a pretty silly idea. Why would you buy an asset just to turn it off? Now your total cost of providing the same amount of bandwidth has gone up, you have hundreds of $millions of eq just sitting there idle, and you have to pay interest on the money you used to buy the network. This will never, ever happen; it makes no sense economically. If they buy a network, they will buy it cheaper than it was built and continue running it. If anything, this will drive prices down even further.

The only thing that will drive bandwidth prices higher is the using-up of existing bandwidth.
lightning101 12/4/2012 | 10:22:49 PM
re: Is Ericsson Exiting Optical? will bookham provide components to marconi for this supposed oem relationship with ericson ?
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