Hot off the trail of this morning’s rumor, Nokia Siemens announced that it purchased Motorola’s network equipment division – you know, the division that doesn’t make handsets and mobile devices. Just how much did it set Nokia Siemens back? $1.2 billion, which isn’t bad when you consider the position in which it puts the manufacturer in North America. Now number two in the mobile equipment market, it can position itself for some steady growth.
According to the New York Times, Nokia Siemens had been vying for a position to compete against Ericsson and Huawei of China, and this acquisition might just put it there:
Nokia Siemens tried to build a position in North America through an acquisition last year, but lost out on two auctions of assets from Nortel, its bankrupt Canadian rival: first to Ericsson and then to the Ciena Corporation.
Both companies paid 0.57 times annual revenues for the Nortel business units. Nokia Siemens is paying 0.32 times annual revenues for the Motorola business.
Nokia Siemens has struggled to take a larger share of North American business on its own; its revenue from North America shrank 9 percent in the first quarter to 153 million euros ($198.5 million), amounting to just 6 percent of the group’s total.
If Nokia Siemens splits off and pursues a separate venture with its new purchase, it just might be what it needs in order to thrive in this competitive market.
[Via: New York Times]