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The deal presents significant cross-selling opportunities, but Telcordia's competitors will take advantage of the integration challenges that the two companies face in the coming year.
Ericsson announced that it completed its acquisition of Telcordia Technologies on 11 January 2012, and provided an update briefing on 18 January. Telcordia will be a sub-unit within Ericsson's Business Unit Multimedia under Mark Greenquist, who will report to Per Borgklint. Telcordia's ATS unit, which focuses on work for the US government, will be a separate legal entity. A lot of the focus is on integrating Telcordia into Ericsson's branding. So far, the two companies have not announced any significant product-related impacts from merging the businesses.
When the acquisition was first announced, we published a Comment that communicates the essential issues surrounding the deal. Following the briefing from Ericsson, we add this additional comment.
Ericsson announced on 14 June 2011 that it planned to acquire Telcordia for USD1.15 billion in cash. Ericsson is placing a big bet in the hope that it can significantly expand its ability to provide software and services to telecoms operators by acquiring a company with a strong portfolio of multi-vendor operations support systems (OSS) products and establish a strong position in North America. This is a significant consolidation of the OSS market, which is increasingly focusing on major integrated suppliers at the expense of independents. It can provide strong differentiation for Ericsson as an end-to-end supplier of business support system (BSS)/OSS technology and services to communications service providers (CSPs), but risks failure due to well-known issues that have destroyed similar deals.
We have three major observations about this deal:
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