RIM still wants some Nortel assets, Ericsson focused on the US

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RIM still wants some Nortel assets, Ericsson focused on the US

By CAROLINE GABRIEL

Published: 28 July, 2009

Although RIM complains it was excluded from bidding in Friday's auction for Nortel's LTE and CDMA assets, the BlackBerry maker still has its eye on some pickings from its compatriot's break-up, notably a range of patents that were not included in the package acquired by Ericsson for $1.13bn.

Nortel holds significant intellectual property, particularly in OFDMA and MIMO as applied to LTE, but there has been uncertainty over how much of this is included in the Ericsson deal, and there is clearly some IPR left on the table. At one time, it was expected that this would be retained as part of a plan to preserve a rump company under the Nortel brand, perhaps focused on licensing, but hopes of such an outcome now seem to be fading.

According to Reuters, RIM is now in negotiations with Nortel to purchase the patents that were not part of the Ericsson transaction; while Canadian newspaper The Globe and Mail reports that RIM may even try to block the Swede's acquisition of Nortel's assets through the courts. RIM said in a statement: "Now that the auction is completed, the government has the authority and responsibility to get involved to protect vital Canadian interests. RIM appreciates the stated willingness of the Minister of Industry to review the situation following the results of the auction. RIM stands ready to engage." Ericsson's deal is subject to approval by US and Canadian bankruptcy courts and regulators, and RIM could file an objection during hearings today. Nortel says RIM disqualified itself from submitting its $1.1bn bid by refusing to sign a standard non-disclosure agreement.

Meanwhile, Ericsson and Nortel held an analyst call to comment on the results of Friday's auction. The Swedish giant's CFO and CEO-in-waiting Hans Vestberg was eager to distance himself from his firm's previous failures in CDMA. "We believed CDMA technology would spread out worldwide," he said, referring to the business that Ericsson gained as part of a settlement with Qualcomm, but which it exited in 2005. Now CDMA has "limited growth opportunities" and is concentrated in a few key geographies, but is important to Ericsson's plans to grow its position in north America, Vestberg explained. "I think it is a big differentiator: the concentration of this asset and what it brings us compared to trying to bring up the business from zero." He stressed that the acquisition plugged gaps in Ericsson's ability to support CDMA migrations to LTE.

This will be music to the ears of ZTE, the most aggressive player in the broader market for CDMA - which is still expanding in some emerging markets, notably in Africa and parts of Asia, but with no interest in LTE migration. This migration - and therefore the markets of north America, Japan and China - are the interest for Ericsson, which is likely to leave the lower margin, broader CDMA base to its Chinese rival and Alcatel-Lucent.

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