Sep. 10, 2015, 2:11 PM
- Ericsson (ERIC +1.1%) announced this morning it's buying Envivio, a provider of video processing hardware/software for delivering content to a variety of devices, for $55M.
- Ericsson, which has made a slew of acquisitions in recent years to lower its exposure to a slow-growing mobile infrastructure hardware market, plans to add Envivio to its TV and Media unit. In 2013, the company bought U.K. media/content service provider Red Bee Media, as well as Microsoft's Mediaroom IPTV infrastructure software unit. The year before that, the company bought Technicolor's broadcast services division.
- The deal appears to be fueling M&A hopes for Envivio rival Harmonic (NASDAQ:HLIT); Sidoti has upgraded the company to Buy. With a current $546M market cap, Harmonic would be a bigger fish to swallow.
Sep. 10, 2015, 8:09 AM| Sep. 10, 2015, 8:09 AM | 1 Comment
Jul. 17, 2015, 3:17 AM
- Ericsson (NASDAQ:ERIC) reported second-quarter sales and operating profit that topped analysts' estimates today as carriers in Asia and Europe spent more on improving their wireless networks.
- Sales rose 11% to 60.7B kronor ($7.1B), while profit grew to 3.6B Swedish crowns ($422M). However, the company's closely watched gross margin shrunk to 33.2%, weighed down by one-time restructuring expenses.
- Ericsson also faces a number of challenges ahead, including defending its leading network-equipment position against Nokia's $16.6B acquisition of Alcatel-Lucent and its many legal disputes over mobile technology patents.
Jul. 16, 2015, 5:30 PM
Jul. 10, 2015, 11:14 AM
- The Euro Stoxx 50 index is up 2.8% after Greece submitted a bailout proposal that met a number of the demands set by creditors for austerity measures and legal reforms. The Nasdaq is up 1.3%, and the S&P 500 1.1%.
- In addition to Nokia and Alcatel-Lucent (previously covered), major European tech gainers include SAP (SAP +3.7%), Ericsson (ERIC +3.6%), ASML (ASML +4%), and STMicroelectronics (STM +4.7%).
- Some SAP news: 1) CEO Bill McDermott has been discharged from a hospital after suffering an accident at his relatives' home. 2) A U.S. federal appeals court has upheld the cancellation of a patent owned by private Versata that led to a $391M infringement ruling against SAP.
- ASML reports on July 15, Ericsson on July 17, SAP on July 21, and STMicro on July 23.
Jul. 6, 2015, 2:42 PM
- Nokia (NOK -3.6%), Alcatel-Lucent (ALU -2.9%), Ericsson (ERIC -2.6%), and SAP (SAP -2.6%) are selling off after European markets dropped in the wake of a Greek rejection of austerity measures demanded by creditors. France's CAC-40 fell 1.8%, Germany's DAX fell 1.5%, and the Euro Stoxx 50 fell 2.2%. The Nasdaq and S&P are both down 0.8%. The euro is down 0.5% against the dollar.
- Something similar happened to Nokia and Alcatel a week ago. The merger partners are respectively down 11% and 10% from their June 22 closes.
Jun. 4, 2015, 11:13 AM
- A week after Citi upgraded Ericsson (NASDAQ:ERIC) on a belief U.S. wireless capex will improve, JPMorgan's Sandeep Deshpande has done the same.
- Deshpande, who now has an Overweight rating and $12.20 target, observes Ericsson's Q1 U.S. equipment revenue was near a cyclical low, and expects recent spectrum auctions to boost U.S. capex. "Additionally in early '16 high quality low frequency spectrum will be auctioned meaning a new capacity investment cycle should start in '16."
- He adds Ericsson's cost-cutting efforts should improve margins, and notes CEO Hans Vestberg recently stated industry consolidation should provide a margin lift.
May 28, 2015, 10:37 AM
- Citi's Ehud Gelblum, upgrading Ericsson (NASDAQ:ERIC) to Buy: "We believe the critical North America market is likely to start showing signs of life in the second half of the year, after remaining moribund for the past six quarters. We believe the recovery extends beyond H2 and continues into 2016 as operators are likely to deploy new equipment post the AWS-3 spectrum auction."
- With Ericsson (ERIC) having sold off hard last month due to a Q1 miss blamed partly on weak North American 4G spending, Gelblum thinks current levels could represent "a compelling entry point."
- He also argues cost cuts will help boost margins, that the Nokia/Alcatel-Lucent merger could allow Ericsson to gain share (others have argued the same), and that a resolution of Ericsson's patent battle against Apple would provide a bottom-line boost.
- The upgrade comes a day after Gelblum downplayed remarks from chairman Leif Johansson indicating Ericsson is open to making a big acquisition. "[A]fter speaking with the company and doing some thinking of our own, we do not believe there has been any change to ERIC’s thinking or approach to M&A. There had already been much speculation Ericsson will respond to Nokia/Alcatel by acquiring a wireline equipment vendor.
May 27, 2015, 4:38 AM
- As the telecom-network industry consolidates, Ericsson (NASDAQ:ERIC) is now more open to a bigger M&A deal in order to remain competitive in the market, Bloomberg reports.
- "I see no reason why we, given the right preconditions, would exclude a larger deal," Ericsson Chairman Leif Johansson said in an interview this month. "But as you know, there aren't that many left."
- CEO Hans Vestberg plans to gather with his top managers in June to discuss strategy, and a key area is what the company can do to counter Nokia's recent $16.6B acquisition of Alcatel-Lucent.
- Possible targets: Ciena (NYSE:CIEN), Infinera (NASDAQ:INFN) and Juniper (NYSE:JNPR)
May 22, 2015, 4:10 PM
- A Florida federal judge has granted an Ericsson (NASDAQ:ERIC) motion for summary judgment on three 4G patents asserted by WiLAN (NASDAQ:WILN). Ericsson was ruled not to infringe two of the patents, and the third was deemed invalid. The trial for the related case has been cancelled.
- WiLAN says it's reviewing the decision with its trial counsel, and notes the counsel's preliminary view is that "there are grounds to appeal" the ruling to a federal appeals court (the CAFC).
- WiLAN fell to $2.02 in regular trading (its 52-week low). The company had sued both Ericsson and Alcatel-Lucent for infringing the aforementioned patents; Alcatel had settled.
Apr. 23, 2015, 9:13 AM
Apr. 23, 2015, 6:21 AM
- LM Ericsson Telephone Company (NASDAQ:ERIC): Q1 EPS of SEK0.77 misses by SEK0.35.
- Revenue of SEK53.5B (+12.6% Y/Y)
- Shares -8.2% PM.
Apr. 22, 2015, 5:30 PM
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Apr. 18, 2015, 8:04 PM
- Nokia (NYSE:NOK) and Alcatel-Lucent's (NYSE:ALU) planned merger could unravel Nokia's R&D partnership/reseller deal with Juniper (NYSE:JNPR). Juniper, which has partnered with Nokia on solutions that pair the former's routers with the latter's base stations and mobile core network gear, counts Alcatel as its second-biggest rival (after Cisco) in the carrier router market, and also squares off against the company in other markets such as carrier SDN software.
- Ruckus (NYSE:RKUS) is another Nokia partner that could be in the crosshairs: The company competes against Alcatel in carrier Wi-Fi hardware, and has a reseller deal with Nokia that goes back to 2012. The deal was recently expanded to cover Wi-Fi/4G small cell systems.
- At the same time, the merger has fueled speculation one or more rivals could respond with acquisitions of their own. A potential acquisition of Juniper by mobile infrastructure giant Ericsson (NASDAQ:ERIC) has especially been the subject of much talk.
- Ericsson is also viewed as a potential suitor for optical networking hardware vendors/fellow Alcatel rivals Ciena and Infinera. Ruckus has been seen as a potential M&A target for a long time. However, it currently competes against Ericsson, which bought Wi-Fi hardware vendor BelAir Networks in 2012.
- RF backhaul hardware maker DragonWave (NASDAQ:DRWI) could also lose business thanks to the merger; it bought Nokia's RF backhaul business in 2012. and maintains a reseller deal. However, H.C. Wainwright recently downplayed those concerns, arguing Alcatel's RF backhaul systems are expensive and clunky.
- Juniper and Ericsson report earnings on April 23, and Ruckus on April 30.
Apr. 16, 2015, 7:19 PM
- BMO, Citi, Crag-Hallum, Bernstein, Goldman, Credit Suisse, and Natixis have downgraded Alcatel-Lucent (NYSE:ALU) following news of its all-stock merger with Nokia (NYSE:NOK). Nokia has been upgraded by Bernstein, Natixis, and Morgan Stanley, and downgraded by Citi. RBC, and Finland's Pohjola Bank.
- Citi: "We continue to believe Nokia would have been better off acquiring just the Wireless assets but were forced to acquire the entire company possibly leading to what we believe was a low purchase price...We believe the all stock structure (and no collar) creates new risk for Alcatel holders..."
- The firm thinks a part-cash deal would've been better, given low interest rates. It also argues a target of €900M/year in cost savings by 2019 could be tough to hit, given limited R&D overlap.
- RBC: "We're strong proponents of industry consolidation in markets with high R&D investments and intense price competition" But like Citi, the firm thinks Nokia should've only bought Alcatel's wireless assets. It also believes "product portfolio rationalization may take 3-5 years," and that R&D commitments to carriers could affect near-term cost savings.
- Deutsche, in a note just before the announcement: "We believe a Nokia/ALU deal would create share gain potential for Ericsson (NASDAQ:ERIC), firstly in China, where telcos would likely want to restore share balance between overseas vendors, and in North America at Sprint, where Ericsson would likely be able to re-enter ... In addition, we note that ALU’s overlay technology is not compatible with Nokia’s single RAN which in our view will make it time consuming to combine R&D roadmaps and extract financial synergies."
- Morgan Stanley is more optimistic: "With Alcatel, Nokia now has exposure to the #2 edge routing player, taking share in both edge and core, a strong footing in the consolidating optical market, and a duopoly position in the growing wireline access market ... In the US, Nokia will now supply to all big four wireless operators and now has enough scale to compete with Ericsson and Huawei on 5G. The larger Nokia will have doubled its patent portfolio too – which makes the patent story more credible."
- Both companies fell slightly today. Nokia is nearly flat since a Friday report about a potential HERE unit sale (later confirmed) sparked M&A speculation. Alcatel, which has been on a roller-coaster ride, is up 2% since the report.
- Previously: The merger announcement, details/asset sale plans
Apr. 13, 2015, 4:10 PM
- Sources tell Bloomberg Nokia (NYSE:NOK) might announce a deal to buy Alcatel-Lucent's (NYSE:ALU) wireless infrastructure hardware assets "as early as this week." Though a full-blown buyout of Alcatel has also reportedly been examined, a wireless deal "remains the most likely scenario."
- Nokia execs are reportedly working to win the French government's support. French government reps are said to be working on a compromise that would protect some domestic R&D jobs.
- Acquiring Alcatel's wireless unit (2014 sales of $5B) would yield cost synergies and increase Nokia's mobile infrastructure scale as it battles against market leader Ericsson (ERIC) and China's Huawei and ZTE. It would particularly strengthen Nokia's position in North America (Lucent's stronghold prior to the merger) and China. At the same time, the post-merger entity could lose share with carriers already relying on both Alcatel and Nokia, and wanting to maintain their current level of supplier diversity.
- For Alcatel, a sale would further lower the company's net debt load (a recent priority) and shed a business that has underperformed relative to Alcatel's IP routing unit.
- Alcatel closed up 7.9%. Nokia closed up 3%.
- Earlier: Nokia reportedly in talks to buy Alcatel-Lucent assets
LM Ericsson Telefon AB provides telecommunications equipment and related services to mobile and fixed network operators globally. The company operates through three segments: Networks, Global Services, Support Solutions and Modems. The Networks segment delivers products and solutions for mobile... More
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