Ericsson claims US lead as Motorola cuts back
Published: 1 May, 2009
READ MORE: Ericsson | Motorola | US
Talk about rubbing salt in the wounds. Not content with claiming the recession has had "limited" effects, Ericsson is now crowing that it is heading for US market leadership - just as former US infrastructure big hitters Nortel and Motorola go into further decline.
Having won part of the Verizon LTE deal, Ericsson CEO Carl-Henric Svanberg is bullish about gaining major share in its most difficult market, north America. He said LTE has opened a strategic opportunity for Ericsson and told the Q1 earnings call: "We took half of Verizon's 4G roll-out, which won't be much revenue this year - more next year - but even that positions us now with Verizon in parallel with AT&T, so we're also the biggest infrastructure supplier in north America."
Alcatel-Lucent, the incumbent leader of the CDMA sector, questioned Svanberg's vague criteria for leadership, and told TelephonyOnline: "Our leading portfolio plays broadly across wireline, wireless and converged networks .... It boils down to how you define 'infrastructure'."
ALU had its own good news, following its announcement of $1.7bn in Chinese contracts earlier this week. Now it has added to one of its major growth areas, managed services, forming a joint venture with Indian mobile leader Bharti Airtel to manage its wireline broadband and telephone networks and support its migration to next generation converged network.
Ericsson's new strength in north America will hit Nortel and Motorola the hardest, as they continue to struggle. The Canadian firm now has until the end of July to exit bankruptcy protection, and its latest plan is to sell its 50% share of the LG-Nortel joint venture. The JV is expected to be valued at about $1bn and interested parties are said to include Huawei and private equity groups Providence Equity and Carlyle Group. Nortel noted that "LG-Nortel is a separate and solvent entity with no debt and a strong cash balance". Analysts are divided on whether LG would move to take full control, or even exit altogether, depending on its long term position on telecoms infrastructure.
Over at Motorola, the infrastructure business, included in the Networks & Mobility unit, has been the bright spot, but its ability to buoy up the ailing firm's performance looked less strong in the first quarter. Even in WiMAX, a technology it was fully poised to dominate, Motorola told its earnings call that share and revenue here were under pressure (co-CEO Greg Brown blamed delayed carrier deployments, but share-stealing by a rampaging Samsung must also be a factor".
Motorola is looking to scale back on both its WiMAX and LTE efforts to be "more reflective of the market" though it will support existing LTE trials. "We are moderating our investment in WiMAX R&D to reflect current market conditions," Brown, even while reporting "two dozen" contracts in the quarter, and expecting $500m to $600m in WiMAX revenue this year.
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