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Why is RIM trying to block the Ericsson-Nortel deal?
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Research In Motion has been loudly pushing the Canadian government to review, and perhaps block, Ericsson's $1.13 billion winning bid for much of Nortel Networks' wireless assets. But what is it really after?
The Canadian BlackBerry maker has not commented on its motivations, beyond saying that it wants to keep the assets in Canadian hands. Thus, speculation has run rampant about what RIM's true motivations are. The company may want the 600 or so wireless patents that Ericsson stands to win in the deal. Other analysts have speculated that RIM might actually want to run Nortel's CDMA business, which many observers have pointed out would be peculiar since RIM makes smartphones and not networking equipment.
RIM could also stand to benefit by acquiring some of Nortel's LTE engineers, which would give it a leg up on designing phones for the 4G standard as it becomes more prevalent.
The Canadian government is still mulling its options, but whatever the result, it seems RIM stands to lose little and gain much by asking the government to intervene.
For more:
- see this Dow Jones Newswires article (sub. req.)
Related Articles:
Courts approve Ericsson-Nortel deal
Canadian government mulls Ericsson-Nortel intervention
Ericsson wins Nortel wireless assets for $1.1B
Ericsson jumps into Nortel auction fray
MatlinPatterson outbids NSN on Nortel wireless assets
Comments
Posted by Michel S. | July 31, 2009 - 12:40pm
Nokia and Ericsson are competitors of RIM trying to gros share of the high margin smart phone market. The more either pays for Nortel CDMA assets the less cash they have to invest in smart phones and hence delay their ability to take market share away from RIM. RIM raised the price without actually bidding. Pretty smart move!
Posted by Mark Knakowski | August 1, 2009 - 1:24pm
so RIM sits on its $1B cash. Advantage Sony/Ericsson.
Posted by steve w | August 2, 2009 - 9:00am
Ericsson and Nokia are so large, that a $1 or $2 billion dollar purchase has no impact on their balance sheet what-so-ever. The price could triple or quadruple, or more, and it would mean nothing to Ericsson and Nokia.
This is all about patents, and access to the North American markets. Remember how Qualcomm has sucked Ericsson and Nokia dry with its 3G CDMA patents? Nokia actually took Qualcomm to court for charging "unfair" royalties. Also, the telecom business used to be highly nationalistic in structure. European vendors owned Europe, while NorAM vendors, like NT, were big in N. America. Now that every single big Canadian equipment Vendor has failed, the European "winners" are essentially fighting over rights to channel, and the carrier relationships.
It's a cheap way to buy IP and key customers.
If Ericsson wins (and I worked for them for 6 years), expect the big E to slowly fire everyone in Canada except those with direct carrier relationships, as they transfer all R&D home. It's cheaper in Sweden.
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