Ericsson claims it hasn't felt impact of recession yet
Published: 23 February, 2009
READ MORE: Ericsson
Last week's Mobile World Congress reinforced the trend for the top vendors to get stronger through recession, with Ericsson and Alcatel-Lucent showing a renewed confidence, buoyed by winning the world's first commercial LTE deal, with Verizon; and Huawei storming ahead.
Meanwhile, Nortel continued to pursue the difficult goal of convincing the market that it will emerge from bankruptcy protection soon as a whole new company, but at least it has started to announce some concrete steps towards a dramatically restructured business. It is expected to sell off several units, and potentially to break up altogether, but it is starting fairly small, offloading much of its application delivery portfolio to manufacturer Radware.
Radware will take on Nortel's Application Accelerators 510 and 610; five-strong Application Switches range; and the Virtual Services Switch (VSS) 5000. Joel Hackney, president of enterprise solutions at Nortel, said in a statement: "We remain focused on our Enterprise business to deliver our industry leading networking infrastructure that comprises our end-to-end Unified Communications solutions, including real time and wireless networking capabilities, services, security and integrated applications." Nortel will still offer the affected products under an OEM deal with Radware.
Ericsson was rubbing salt in its erstwhile rival's wounds by repeating its claims that it was not feeling the impact of the recession, despite a 31% profit drop in the last quarter and 5,000 "pre-emptive" job cuts. CEO Carl-Henric Svanberg said, in an interview with Swiss magazine Finanz und Wirtschaft: "So far, we don't see any signs of the downturn in our figures", nor any slump in fourth quarter orders. The main markets supporting this resilience are China and India, and also the investment in mobile internet systems in the US. Svanberg boasted of his company's solid financing, but said he would be cautious around acquisitions in 2009, and remained fully committed to the Sony Ericsson joint venture.
Alcatel-Lucent's CEO Ben Verwaayen was also in bullish mood in the aftermath of MWC, despite persistent doubts about how effective his reorganization plan will be in turning the giant around. Verwaayen said in an interview that ALU is "alive and kicking" and would regain market share later this year, also looking to China for its biggest growth. "We are among the top four wireless equipment vendors in China, and we are in the process now of entering the top three," he said. "We are going to stay in wireless and we are going to be a factor to reckon with." But some analysts expect it to take two years before ALU gets back into profit.
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