Ericsson, Cisco Pool Telecom, Internet Savvy in Wide-Reaching Alliance
November 09 2015 - 7:20AM
Dow Jones News
STOCKHOLM—Ericsson AB and Cisco Systems Inc., two of the world's
biggest telecom-equipment providers, have clinched a broad
technology and commercial partnership that stops short of a
full-blown merger but aims at an unusual level of cooperation in
everything from research and development to customer service.
The two said Monday they would team up across the board,
including jointly working on a wide range of products used in
wireless networksand Internet infrastructure as the two face
heightened competition from the â,¬15.6 billion takeover of
Alcatel-Lucent SA by Nokia Corp., expected to be formally launched
later this week.
The alliance will help add $1 billion or more in annual sales
for each company by 2018, Ericsson and Cisco said.
For the Swedish company, the move could help it retain its
position as the world's biggest telecom-equipment supplier by sales
just as Nordic rival Nokia regains strength. Nokia's takeover of
Alcalet-Lucent could create a powerful challenger to both Ericsson,
a leader in wireless equipment, and Cisco, which dominates market
for Internet gear.
Ericsson said the partnership with Cisco will allow it broaden
its offering immediately, much faster than what it could have
achieved through an acquisition or by developing Internet equipment
in-house.
"This is a much more agile and efficient choice," Ericsson Chief
Executive Hans Vestberg said in an interview. "We can start already
tomorrow."
Mr. Vestberg said talks with Cisco had begun 13 months ago.
The U.S. company said pairing up with Ericsson will help it
address a larger market, and didn't raise much of an overlap
issue.
"Ericsson's portfolio is highly complementary to ours, there is
no better combination we can think of," Cisco Chief Strategy
Officer Hilton Romanski said in an interview.
Ericsson, which has around 37,000 patents and employs 116,240
staff world-wide, reported revenue of 228.0 billion Swedish kronor
last year ($27.36 billion).
San Jose, CA-based Cisco reported revenue of $49.2 billion in
its latest fiscal year to July 25.
Write to Jens Hansegard at jens.hansegard@wsj.com
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(END) Dow Jones Newswires
November 09, 2015 07:05 ET (12:05 GMT)
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