Ericsson Wins Wireless Auction

By Mark Evans | Published: July 25, 2009

After what appeared to be an intense auction process, Ericsson emerged as the winner of Nortel’s CDMA and LTE R&D business with a $1.13-billion bid.

The bid was more than 50% higher than Ericsson’s original bid of $730-million – and exactly what Research in Motion was willing to pay for the assets if it had been approved as a qualified bidder.

Ericsson said is getting the assets debt free and the purchase will add to its earnings within a year of closing. Magnus Mandersson, head of Ericsson Northern Europe, will be president of Ericsson’s CDMA operations, while long-time Nortel executive Richard Lowe was named chief operating officer.

The deal still needs to receive court approval, which Nortel will ask to receive on July 28.

Source: Wall St. Journal

Update: Here’s the Ericsson press release, including this statement:

“Acquiring Nortel’s North American CDMA business allows us to serve this important region better as we build relationships for the future migration to LTE. Furthermore, by adding some 2,500 highly skilled employees, of which about 400 are focused on LTE research and development, Ericsson reinforces and expands a long-term commitment to North America. This deal, along with our recently announced Sprint service agreement, truly positions Ericsson as a leading telecoms supplier in North America,” said Carl-Henric Svanberg, President and CEO of Ericsson.
…and here’s a post on Nortel’s Buzzboard blog about the sale:


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  • farscape

    @SleeplessinToronto:”I think Richard has done a great job over the years”

    Care to tell us about some of his accomplishments?

  • nothappyanymore

    BAD, bid's were only for NA operations (+ caribbean).
    all the latam cdma ops are going to be transfered to NBS or kicked out.
    the dirty part here, is that even cala engineers who supported networks “in scope” are out of the game, as heavy weights on richardson/etc prefered to retain groups that are closer.

    open question, havin E/// as winner, will this prevent them for offering on other assets?
    I think NT gsm also have considerable big installed base on at&t and T-mobile

  • yes4aapl

    NTInfidel
    You switched your loyalty to NSN too soon.
    Mike Z warned you about that in this post
    http://community.nortel.com/go/blogs/buzzboard/…
    During this time, employees must remember that they should continue their ongoing duty to act in the best interest of Nortel and not any potential purchaser.

    In addition to the auction process and Ontario Superior Court and U.S. Bankruptcy Court approvals, the agreements are subject to other customary approvals, including government approvals such as in Canada and the U.S.

  • ChaiTea

    Accomplishment #1: Fastest to find a life boat amongst 3100 people.

  • Nortel watcher

    nothappy,

    wow, anyone being transferred to NBS cannot count their blessings for long since that lifeline can't last more than 90 days…so Nortel is abandoning the LatAm carrier business market such as VoIP and handing it to the likes of ALU on a silver platter…ALU executives in LatAm have to be happy about that

  • protosphere

    “What will happen on July 30 when “the bankruptcy protection” ends in Canada?”

    They will apply for another extension on their extended extension's extension

    They will amend the amended amendments of an emended amendment with their supplier

    They will request additional funding amid uncontrollable laughter excluding the EDC who will actually give it to them

    They will place insiders into only the companies they are willing to sell to

    Departing insiders will get a golden telephone with pre-programmed speed dial to the OSC and their lawyers

    Their lawyers will litigate super nova intergalactic immunity clauses with over a century of billings to be paid before creditors

    They will boast maintaining value while rewriting the definition of assets to include baby donkeys

    Mr. Manley 's law firm will defend Joel for throwing shoes while screaming at he can do what ever he wants

    Their Insurance company will deny coverage under they were only kidding clauses

    Mike will continue to happy talk how wonderful the process has proven over the years and how he enjoyed being CEO of this great company of talented engineers and wonderful technology until he is carried away to paint eggs in a Chicago rehabilitation center

    Shareholders will evil eye the government, OSC, and SEC as Skilling and Ebbers apply for early parole

    …anything but Chapter 7 =)

  • protosphere

    She can't take it any more Captain, she's going to blow I use to reiterate… but these execs have second lives after it does… some, maybe like a cat

  • justproud

    Like with NSN, not even a word for ASIA and EMEA employees _ who are not part of the deal_ in Mike Z mail.
    This management gives me the nausea. A few years ago I was proud to be a NN employee, I am today almost happy to leave…

  • protosphere

    http://www.ericsson.com/ericsson/press/releases…

    “Ericsson to acquire majority of Nortel's North American wireless business”

    “Going forward, research and development costs are expected to be relatively low in CDMA compared with other technologies.”

  • NTblinker

    - Ericsson to acquire majority of Nortel's North American wireless business

    in ericsson's web page, it is said that the sale is only for the North American assets, so this sale process only affects the Nortel subsidaries which are already under administration(bakruptcy protection). So does this mean china cdma will be in Nortel's management, not E///?

  • protosphere

    Sounds like it isn't over yet:

    While we still have i’s to dot and t’s to cross (including court approvals in the U.S. and Canada as well as regulatory approvals)

    there are still significant steps left to complete the transaction, including court hearings in the US and Canada next week, as well as ongoing regulatory and commercial deliverables

    remain patient while we clear these last hurdles

    The next few weeks will be critical

    ________________________________________

    So what's worse case? No sale?

  • felixmk

    Ericsson has a large lab in Montreal and is sole supplier to Rogers.

  • slumdog

    Comments from NSN on the auction outcome….

    “Our final offer for Nortel’s assets represented a fair price, and we did not enter this process with a win-at-any-cost mindset,” said Bosco Novak, Chief Markets Operations Officer, Nokia Siemens Networks. “Ours was an opportunistic bid aimed at supporting the great progress we’ve made in North America in the past 18 months, and we are very confident that momentum will continue to grow.”

    http://www.unstrung.com/document.asp?doc_id=179678

  • justproud

    I believe this means CDMA team in China should start to look for another job…
    The rip of the NN GSM base already started a few months ago. I suppose CDMA will follow the same way (if not already started)

  • yes4aapl

    Shareholders will evil eye the government, OSC, and SEC as Skilling and Ebbers apply for early parole

    …anything but Chapter 7 =)
    —-
    re
    What about creditors in that process?
    MatPat did it once. They protested, they engaged in the comédie of bidding for what's legally theirs. Would they do that again?
    Would judge do it again?
    How long it will be prolonged? Until there is Zero cash in the Bank?
    Idling costs are huge I guess.
    btw
    MatPat did not get much support from other creditors. Does it mean MatPat is fighting alone to get more value for their Loss on Nortel's investment?
    If CDMA was the most valuable part question is what's left?
    and there are those tax credits! Will RIM get them and how?

  • felixmk

    Dear Magnus,

    First let me say how happy I and the team are with your purchase of Nortel CDMA. I love Sweden – the Swedish Bikini Team, ABBA, Bjorn Borg, Meatballs, just about everything. I am proud to be a member of Ericsson now and look forward to a long long career kissing Swedish butts instead of American and Canadian butts (your butts are nicer and smell better too). I have some sycophantic ideas that will bring value to Ericsson, but more about that later. Did I mention I love Sweden? Forgot to say that I am giving up on Ethan Allen and will be refurnishing with IKEA. Also trading in my Porsche for a Saab. Don't listen to all the sourpusses on this blog – they do not matter – only you matter (and any of your other Swedish exec colleagues that I meet along the way). You will love our Nortel GIS sessions (we fired all the people who asked embarrassing questions), Zmails (now renamed MagnusMails), Powerpoint slides (we have the beta version of Powerpoint 2015 for max visual effect) and our outsourced support (China and Elbonia are lovely at this time of year). I am sure you are as excited as I am to get started on this new adventure!! Did I mention that I love Ericsson's logo – blue is my favorite color!

    Your best new buddy
    Richard Lowe
    Just call me Dickie

  • NTblinker

    – Ericsson (NASDAQ:ERIC) has today entered into an asset purchase agreement to acquire the parts of the Carrier Networks division of Nortel relating to CDMA and LTE technology in North America.

    But this is the proof that they will not being affected from this deal. But later if they decide to liquadate china or where else they will do it with another asset sale agreement.

  • Pauljam

    you mean like Nortel would pull European jobs back to US and Canada on a rgegular basis – turnabout is fair play

  • NTInfidel

    It isn't that simple. Buy an intact team with a software base and IP ready to roll is a great way to start.

    Trying to build a new team one hire at a time, re-writing all the software from scratch will set them too far back to even bother. They won't be setting up shop in Ottawa now.

  • NTblinker

    Now enterprise gains importance for us because it has complexity and covers a set of regions globally, would MP try its second chance here in this business? i do not believe in but would like to…

  • CommonCents

    Ericsson already had an LTE product, thats why they were selected for phase 4. They have R&D, manufacturing and scientists. They have pretty good white papers on their site.

    They may take a few who know the IP, but who else? How many positions in LTE are redundant to what they have already?

    My contention is that its worth more to them to take NSN out of competition then the value of the assets. If NSN was going to get, say 20% of a 2B market, now they won't, half that will go to Ericsson (the other to ALU).

  • mtvessel

    The media coverage we’ve seen this week, and the eventual purchase price, underscore the value the industry places on these assets. In my discussions with Ericsson it has always been clear that they place a high value on our strong customer base, our best-in-class technology and innovation, our world-class operations, and most of all on you; our talented and committed employees.

    I must have made a mistake. I thought Nortel had gone bankrupt because it could not pay its bills. I had no idea they were doing so well. The shareholders are going to be very pleased with the results produced by their management.

    BNR was a world class research facility. Its campus is now going to be taken over the the federal government to house civil servants. Nortel was no Avro Arrow but BNR was more than that. The government killed the Arrow but Nortel management killed BNR. How much did teh shareholders pay this mangement group to do it?

  • Nortel watcher

    NTblinker,

    Are you suggesting that Nortel will do an asset sale of the Carrier businesses on a regional level, i.e. China, EMEA, CALA?

    Without the intellectual property assets sold already to Ericsson, just what value is left for the Carrier business on a regional level?

    Certainly, they can't be pinning their hopes on local relationships.

  • exnt_x_2

    … (we fired all the people who asked embarrassing questions) …

    *snort*
    That's pretty good :)

  • Nortel watcher

    …..”The bid was more than 50% higher than Ericsson’s original bid of $730-million – and exactly what Research in Motion was willing to pay for the assets if it had been approved as a qualified bidder.”"”"”

    had R.I.M been present in the auction, I am certain the winning bid would have gone higher than $1.13B

  • NTblinker

    i wonder how this process will affect the jobs outside north america related with the CDMA business support of the installed base in NA region?

  • exnt_x_2

    … and good riddance.

  • zeroman

    severance, likey not. seems to be number one thing on employee minds.

  • yes4aapl

    It looks like RIM did bid probably in partnership with MatPat and they lost the auction
    example
    MP $1.100 bill
    E// $1.105
    ….
    E// $1.130

  • jonnyc5

    Keep in mind the company has $2.6 billion in cash also, on top of any money generated by these sales. That cash is not going to the buyers of any business

  • NTInfidel

    I had no idea who would win, just who I wanted to win.

    No doubt myself and most affected personnel wanted NSN to win as it was best for employees. Ericsson is pretty much the worse case scenario.

    NSN was the best choice for Employees, Ottawa and Canada. Ericsson is the best choice for Ericsson. There will be no long term lab here. They are buying for the installed base.

    Many will be out of scope and be let go with no severance. The lucky might get slightly more than a years employment to transition the work.

  • scalppeeler

    If you really think any of the cash on hand they have is going to creditors you are sadly mistaken.

  • couldloosejob

    This is hilarious…..I love it.

  • morleyl

    I am not impressed with Richard Lowe as a leader. I think COO is right to bridge the transition gap. my view is that RL and crew screwed up the two Gary's and then Mike Z. Nortel never changed and thats why we are hear today.

  • nortelson

    “stalking horse auction” – better name would be “the TROJAN horse auction”! ;)

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  • nothappyanymore

    ez answer for america structure, almost everybody is gonna be layoff, moved to nortel NBS or in best escenario will retain a few “talents” as contractors.(non payroll workers)

  • less

    The Swedes should sue Nortel for copyright infringement, specifically “stealing the color blue from our flag”. The current BoD would be just dumb and arrogant enough to throw a few 10 million $$$ at 'em in “token of goodwill”.

  • lagoos20

    Wireless Auction..Nice nowdays all people liking the wireless Connection.I am also Using the Ericsson Mobile..& internet for my I usually check my internet speed test using the site http://www.ip-details.com/internet-speed-test/..laptop

  • jonnyc5

    Where else is it going to go? The creditors control Nortel right now – the creditors and their committees.

  • grindstone

    Fair, not fair, it happens. And it's something to be concerned about. The days of retiring with your company are long long long gone.

  • suespradley

    It is with disappointment that I respond to this blog as I was quite hopeful that NSN would prevail in the auction. In the end we did not but I thought some closure to the CDMA team and myself might be helpful.

    It was personally and professionally great to get to work with all of you again. My colleagues were really impressed with each of you and your passion for your customers and R&D designs. That was no surprise to me from my days of working with you in the past.

    I do not of course consider this the 'end' for any of us. For most of you it will mean a new company and new horizons. For NSN we will continue to push forward into the North American market. We have, in the last year , had the good fortune of winning the wireless networks for 3G overlay build at Telus and Bell Canada and we are in the process of building new 3G networks for Videotron and Globalive, IMS at Time Warner and Verizon to name a few. I do not mention these to sound overly confident but simply to say that we started out in NAM knowing it was a competitive marketplace that many vendors covet and no surprise CDMA and LTE are no different. It means that we will now move forward in a different way but we will not give up, nor would any of you, nor would the marketplace expect us to do so.

    The entire team at NSN enjoyed meeting many of you and will look back on the last few months and know that we met some very great people and hope you felt the same of us.

    Thank you and best of luck to each of you.

    Sue Spradley

  • smokeemout

    Who will win the bid for Nortel's enterprise unit?

    you be the judge
    Vote here

    http://www.learnmyself.com/personality.asp?p=ta…

  • protosphere

    Isn't Flextronics, concerned that its contractual rights and claims may be affected by the proposed sale of these CDMA and LTE assets to Ericsson?

  • protosphere

    Isn't Flextronics, concerned that its contractual rights and claims may be affected by the proposed sale of these CDMA and LTE assets to Ericsson?

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  • http://pulse.yahoo.com/_WMZ3I6ABRCXUG33NCPLTK3EFLI Gillian Lowe

    f

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