July 19, 2010: Telecom equipment vendor Nokia Siemens Networks (NSN) unveiled a deal to pay $1.2 billion for the majority of U.S.-based Motorola Inc.'s network equipment business
History: Nokia Siemens Network’s formation was announced on 19 June 2006. Nokia Siemens Networks was officially launched at the 3GSM World Congress in Barcelona in February 2007
Acquisition: Initial Analysis
NSN Story
- Gains foothold in North America, Japan, and China
- Gets access to WiMAX (Worldwide Interoperability for Microwave Access) technology and CDMA technology. Currently, NSN had no foothold.
- Gains 50 new relationships. Opens up the ability to cross-sell
- Emerging Market: Gives NSN an advantage in India - having both (WiMAX & LTE) options for BWA (Broadband Wireless Access) implementation
Motorola Story:
- Gets a valuation of about 0.3 to 0.5 of revenue
- Able to get rid of a business which was losing market share and was lacking in technology.
- Concrete on its jewels (Enterprise Mobility & Set top boxes). Increase the value to its shareholders
Risks for NSN:
- Which product does NSN concentrate on for next generation? It has two products one from Motorola and another from NSN that can possibly conflict based on features/ability. Motorola offers a migration path from WiMax-to-LTE whereas NSN product lacks this ability.
- Motorola: converged platform, the WiMAX Evolution – Single RAN, which supports 802.16e (mobile WiMax), 802.16e Enhanced, 802.16m (WiMax 2.0), and LTE
- NSN: single radio access platform, the Flexi Multiradio Base Station (BTS), that supports TD-LTE
- What happens to the existing customers who are on WiMAX? Do they move to WiMAX 2.0 or are they forced to move to TD-LTE (Long Term Evolution Time Division Duplex)? There are 41 customers in 21 countries that can get impacted.
- Among other integration issues, what happens to the two research teams? I am not getting into integration issues among other teams/groups. This one seems to be the most pertinent at this time.
Stock Movement:
- Nokia's stock started higher but ended the day at a gain of approx 4%
- SI stock ended the day losing at about -2%
- Motorola stock showed a gain of 12% at the end of the day