Tuesday, August 11, 2009

Ericsson Owns Nortel Wireless

LM Ericsson buys Nortel Wireless for $1.13 billion on a cash and debt-free basis, which covers the older CDMA and newer LTE wireless businesses of Nortel's Carrier Networks unit. Nortel put its wireless business for auction on 24th July 09 in New York City.

Ericsson CEO Carl-Henric Svanberg said that the acquisition would add 2,500 employees to his company, out of which about 400 will be focused on LTE research and development and Nortel's North American CDMA business allows them to serve better as they build relationships for the future migration to LTE.

According to Ericsson, Nortel's North American CDMA business generated $2 billion last year and the research and development costs are expected to be low in CDMA compared to other technologies.

CDMA, or code division multiple access, is a competent to the GSM cellular, while LTE, is a next-generation wireless network technology that is expected to be much faster. Ericsson expects the acquisition will have a positive impact on its earnings within a year after closing.

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