Ericsson gets Nortel GSM assets for a song

by Guest on November 26, 2009

turkeyWhat does $70 million get you these days?  Well, if you’re a good bargain hunter like the folks at Ericsson, you can get 350 Nortel employees, fat contracts with AT&T and T-mobile, and annual sales nearing $400 million in 2008.

But it’s not all that rosy.  Some analysts think that the current year might only return $200 to $300 million.

Since Ericsson bought the CDMA and LTE offerings from Nortel for $1.13 billion, should they be able to lowball on the remaining wireless assets?  Or am I off base to think that this is a steal?

Granted, the bid was actually for $103 million, with Kapsch CarrierCom, an Austrian provider, kicking in the remaining $33 million to get the existing European rights within the sales areas covering Europe, the Middle-East, Africa, and the Taiwan component of Nortel’s GSM businesses.  But come on, Ericsson will potentially double or triple their investment in the first year alone.

Hans Vestberg, Ericsson’s newly appointed President and CEO shared his thoughts on the merger, “The transaction emphasizes Ericsson’s commitment to the North American market and strengthens our position as the leading provider of telecommunications technology and services in the United States and Canada.” Uhm, yeah.  You bought it at bargain basement prices, and you’re going to make a killing off it for the immediate and foreseeable future.  That’s the kind of thinking that made him President

Maybe the team at Nortel was just getting into the spirit of the American thanksgiving, and wanted to have the biggest Black Friday sale ever.  Whatever the reason, Ericsson and Kapsch should certainly be giving thanks tonight!

Written by: Jason Finnerty. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Identi.ca, or Friendfeed

Previous post:

Next post: