Ericsson Acquires Airvana's EVDO Biz

Zacks

Ericsson (ERIC) recently acquired the EVDO business of Airvana Network Solutions. The software enables data transmission in CDMA wireless networks. The deal was structured as a stock purchase, but other financial details were not disclosed.

The acquisition is a strategic move by Ericsson to strengthen its CDMA line of business. The acquisition also supports the vertical integration strategy of Ericsson for key CDMA products; thereby augmenting its product portfolio and having greater ability to better respond to its customers.

Incidentally, Airvana had filed a lawsuit against Ericsson in Feb 2012. Airvana had accused Ericsson of violating the terms of a deal that required Ericsson to ship Airvana-designed products with Airvana's software and pay royalties. However, post this acquisition both companies will withdraw their allegations.

Ericsson has been strategically acquiring companies to strengthen its core areas, and thus have a better market share. In addition, through these acquisitions, Ericsson intends to serve its customers better across all areas of telecom networks.

Ericsson recently completed the acquisition of Microsoft Corp’s (MSFT) Mediaroom business and became the leading provider of IPTV (Internet Protocol TV) and multi-screen solutions. The acquisition of the TV business comes at an opportune time when the global IPTV market is expected to cater to 76 million subscribers in 2013. 

Further, the IPTV market is expected to generate revenues of $32 billion.  Ericsson expects the IPTV market to have 105 million subscribers with revenues of $45 billion by 2015.

Ericsson currently has a Zacks Rank #3 (Hold). Other wireless equipment companies worth a look are Ubiquiti Networks Inc. (UBNT) and Tellabs Inc. (TLAB). Ubiquiti Networks has a Zacks Rank #1 (Strong Buy), while Tellabs Inc. carries a Zacks Rank #2 (Buy).

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