Ericsson buys Marconi

Ericsson buys Marconi

Job losses will be inevitable following Ericsson's acquisition of Marconi for $2.8 billion (£1.2 billion), analysts said today.

Much of Marconi's expertise and R&D resources will go over to Ericsson including all of its DSL, softswitch, optical and networking assets. Ovum principal analyst Michael Philpott applauded the move claiming it complements Ericsson's product portfolio.

"Marconi was the number-two world player in optical transmission. Buying this product portfolio allows Ericsson to complement its wireless transmission portfolio with transmission solutions that are able to be really cost effective," he said.

"This is a very smart move when we are talking about 1Mbit/s HSDPA access in UMTS (Universal Mobile Telecommunications System) networks." Philpott said Marconi was also a regional player in the DSL/MSAN access domain.

"We believe the combined company will have the number-three seat in a very competitive market, where even number one and two have thin margins," he said.

"Buying a data-networking portfolio will allow Ericsson to benefit from some of Marconi's intellectual property assets in the Ethernet data networking area.

"This technology will be used more and more by service providers for collecting the increasing amount of data traffic carried by mobile access networks."

Following the deal, Marconi will become a professional services company called Telent, which will principally operate in the UK.

Philpott said job losses are inevitable, but Ericcson was unwilling to comment.

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