Ericsson buys IP expertise
Swedish telecommunications maker Ericsson announced it will buy US firm Redback Networks in a $2.1 billion deal. Redback makes broadband network routers. The buy will help Ericsson expand further into the Internet segment. As the traditional telephone industry is being dragged into using the Internet, so the borders between telephony and it is getting progressive narrower.
There is some anticipation that US-based Motorola may try to enter a bidding war for Redback. Motorola has been working with Redback, but will not want to do business with rival Ericsson. Alternatively, it may want to start working more closely with Cisco.
Redback, founded in 1996, is a competitor with US companies Juniper Networks and Cisco Systems. The move particularly hurts Juniper, which ha has had a close relationship with Ericsson, accounting for around 13% of Juniper revenue.
Ericsson on is the world's leading maker of wireless telecom infrastructure equipment, including transmitters and antennas. It also makes corporate networking gear, and telephone software, along with defense electronics. In a joint venture with Sony, it is a leadings seller of cell phones.
Ericsson bought the telecomm equipment division of UK-based Marconi for around $2 billion in 2005. Earlier this year, it bought Distocraft, a Finnish company specializing in cell phone based Internet software.
The telecommunications consolidation was stepped up by the acquisition of US-based Lucent Technologies by the French equipment maker Alacatel in an $11.6 billion deal. Also last year was a joint venture between Finland's Nokia and Gwrmany's Siemens. A roll-up makes sense, as the companies that buy such equipment are consolidating and as the telephony and the Internet keep getting closer.
3:21:13 PM 
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