By Moto hi Nokia
saw this today lets see what happens with the handsets now .
HELSINKI — Nokia Siemens Networks (NSN) is buying Motorola Inc's telecom network equipment business, boosting its position in North America and taking number two spot in the cut-throat mobile gear market.
The $1.2 billion cash deal will leave only a few players in the consolidating sector, with Ericsson, China's aggressive newcomer Huawei and NSN the strongest survivors.
NSN, a 50-50 joint venture of Nokia and Siemens -- has struggled to make a profit in the $82 billion market, which was hit hard by the recession.
But under Chief Executive Rajeev Suri the group has started to seek growth more aggressively and fight back against market leader Ericsson and Huawei, former number two.
An NSN spokesman said the deal would be financed from the company's existing reserves and financing agreements.
Nokia Siemens tried to build a position in North America through an acquisition last year, but lost out on two major auctions of assets from bankrupt Canadian rival Nortel: first to Ericsson and then to Ciena Corp.
Both companies paid 0.57 times annual revenues for the Nortel business units. Nokia Siemens is paying 0.32 times annual revenues of $3.7 billion at the Motorola business.
Despite the relatively cheap price some analysts questioned the deal.
"It is a desperate attempt to gain market share in the U.S. after the twice failed attempts to buy Nortel's CDMA and Metro Ethernet businesses," said Earl Lum, founder and chief of industry research firm EJL Wireless.
Lum pointed to Motorola's declining market share -- it had just 3 percent of the global market in March quarter -- and said a tricky integration lay ahead.
"The integration of the personnel and the manufacturing facilities and supply chain will prove to be challenging in addition to the differences in corporate cultures," he said.
Nokia Siemens has struggled to take a larger share of North American business on its own. Revenues shrank 9 percent in the first quarter to 153 million euros ($198.5 million), making up just 6 percent of the group total.
In contrast, Ericsson generated revenues of 9.5 billion Swedish crowns ($1.3 billion) in North America the same quarter, 21 percent of the group total, helped by its Nortel asset buy.
Market research firm Gartner has predicts the overall market to shrink 2 percent this year after a 7-percent fall in 2009, and even the most optimistic industry players see only slight growth ahead.
Smaller vendors, like Motorola, have already focused on picking a limited number of deals and technologies they can succeed in -- especially after Canada's Nortel filed for bankruptcy last year.
Shares in Nokia were 1.4 percent higher at 6.87 euros, while in the United States, Motorola was at $7.72, up 22 cents, in thin volumes in pre-market trading. (Editing by David Cowell)
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