Bringing to near completion the dismemberment of once-proud Nortel Networks, Ericsson said it will acquire the multi-service switch (MSS) division of the bankrupt Canadian vendor. The Swedish mobile infrastructure giant will pay $65 million in cash for the unit, which supplies switching platforms and network equipment for carriers voice and wireless systems.
This marks the third time Ericsson has wolfed up parts of the former Nortel operation. The Stockholm-based vendor earlier bought the CDMA/LTE assets of Nortel for $1.13 billion as well as the Canadian companys stake in a joint venture with Korean electronics giant LG. The MSS assets will complement Ericssons business in building and supplying 4G networks.
Like other major vendors, Ericsson, the worlds largest supplier of telecom network equipment, has grappled with slowdowns in carrier equipment spending the last two years as well as sharp competition from new Chinese entrants Huawei and ZTE. The Nortel acquisitions are designed to broaden Ericssons product line while deepening its business with major wireless carriers.
Ericsson reported disappointing results in its most recent quarter, saying that while its profit more than doubled from the same period a year ago, reaching $274 million, sales fell by 8 percent, to $6.5 billion. CEO Hans Vestberg blamed the revenue decline on shortages of critical components for the wireless networks that Ericsson builds.