LM Ericsson Telephone Company (ERIC) has acquired a U.S.-Spanish telecommunications product and service vendor, Optimi Corporation, to expand its network development capabilities. The companies did not reveal the terms of the deal.
The acquisition of Optimi adds a comprehensive group of services and products to Ericsson’s portfolio offering for telecommunication clients, solidifying Ericsson’s leading position in multi-technology, multi-vendor, Self-Organizing Networks (SONs) and OSS-based network optimization. Further, the acquisition strengthens the company’s workforce through addition of 200 skilled professionals.
Currently, telecom service providers are focused on optimizing 2G, 3G and 4G networks and on balancing their usage such that it minimizes the difficulties of the operators and improve its quality and reduce cost.
Optimi’s networks optimization and management services and products compliment Ericsson’s products and services. Ericsson’s position as a network equipment vendor will be boosted by Optimi’s leading position as a provider of mobile carriers with automated design, optimization and management solutions globally.
As the technology and market leader in wireless equipment (based on the GSM standard), Ericsson stands to benefit from the continued growth of the wireless industry, especially in the emerging markets (including Latin America, Eastern Europe, Africa, China and India). GSM-based network expansions are expected to drive moderate revenue growth over the next several years.
Risk factors include potential negative effects from the continued uncertainty in the financial markets and the weak economic business environment on operators’ willingness to invest in network development. Other concerns include uncertainty regarding the financial stability of suppliers, for example, due to a lack of borrowing facilities, or reduced consumer telecom spending, or increased pressure on ERIC to provide financing. A major competitor of Ericsson is Alcatel-Lucent (ALU).
Headquartered in Stockholm, Sweden, LM Ericsson Telephone Company is a multinational company engaged in manufacturing and selling wireless infrastructure equipment for the telecom sector. It is a total network solutions provider, serving wireless and wireline operators, enterprises, and consumers.
We current maintain a Neutral rating on Ericsson, with a Zacks #3 Rank (short-term Hold recommendation).
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