(Associated Press via NewsEdge) The joint venture between European telecom companies Nokia and Siemens may pressure their North American rivals Motorola and Nortel to finally jump into the consolidation game.
Nokia and Siemens are merging their network-equipment businesses into a joint venture. The move follows Ericsson's acquisition of Marconi and Lucent's merger with Alcatel as companies increase their size and reach to more effectively compete in a market that features a glut of traditional telecom equipment players; new, more aggressive providers coming out of China; and a shrinking customer base.
Motorola and Nortel stand as the last of the major equipment providers that have yet to participate in a large deal. With consolidation all around them, the two will likely have to make some changes to their businesses.
'We believe a Nokia/Siemens JV would intensify pressure on Motorola and Nortel to increase their respective stakes in networking to solidify their positions or conversely find a way to exit or narrow their focus,' CIBC World Markets analyst Ittai Kidron said.
Nortel spokeswoman Patricia Vernon declined to comment on any future moves.
Motorola wasn't immediately available for comment.
The company can make an acquisition to strengthen its network business, and it had reportedly shown interest in Siemens' communications business. But Motorola CEO Ed Zander has repeatedly expressed his disdain for large deals, saying that few have worked out. The company is more likely to focus on its mobile-handset division or make smaller acquisitions to bulk up its networks division.
c 2006 The Associated Press