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Analysts Weigh In On Potential Motorola/Siemens Com Merger
[April 20, 2006]

Analysts Weigh In On Potential Motorola/Siemens Com Merger

TMCnet Contributing Editor
Talks of Motorola taking over Siemens’ Communications division have sparked attention throughout the industry. Analysts with Infonetics Research, an international market research and consulting firm specializing in data networking and telecom, offered their opinions of the benefits and even the likelihood of the potential merger.

Jeff Heynen, Directing Analyst, Broadband and IPTV (News - Alert), noted that although Motorola (News - Alert) has shown an interest in Siemens (News - Alert)’ Communications division, it seems unlikely at this point that an acquisition will take place.

Heynen continued saying that, “Motorola is definitely interested in Siemens’ wireless products and customers, but appears disinterested in their wireline division. Siemens would prefer to sell off its entire Com division, so I don’t think it’s the right fit.”
Instead, Heynen suggested that a Nortel (News - Alert)-Siemens team would make a better combination  as together, the two would become the number one or number two player in enterprise telephony, next-gen voice, optical switching and wireless infrastructure. This type of combination would also satisfy the demand of CEO Mike Zafirovski that Nortel remain active only in those markets where it can achieve at least a 20 percent market share.
Michael Howard, principal analyst and co-founder of Infonetics Research also predicts that a Nortel-Siemens merger would be a better choice as it would create a new number one player in worldwide optical gear, just passing perennial number one Alcatel (News - Alert). The cultures, however, would pose somewhat as a challenge as they would most likely not marry as well as their market shares.
Directing Analyst, Service Provider Next Gen Voice and Mobile Core, Stephane Teral contributed that the vendor landscape is experiencing a shake-up with consolidation among large service providers. “The prospect of having China as the world’s fourth largest economy builds the case for more transatlantic M&A activity that will create more super vendors to respond to large, complex network infrastructure projects.”
Teral also highlighted that as Siemens is the number two company in the $2 billion next gen voice trunk media gateway and softswitch market and is generally strong in both wireline and wireless, a Motorola-Siemens deal would create just such a super vendor. Teral has for some time anticipated that Siemens would sell its communications division, but has doubts about a genuine interest by Motorola to buy the entire Siemens Com package.
The proliferation of mergers and acquisitions in the telecommunications industry has resulted in the creation of vendor giants that may or may not deliver the most competitive services for consumers. If indeed Motorola is seriously considering purchasing the communications division from Siemens, the resulting giant, or super-vendor as to quote Teral, would likely consolidate operations as the wireline division is beyond the scope of Motorola’s current competitive strategy.
Susan J. Campbell is a contributing editor for TMC and has also written for To see more of her articles, please visit Susan J. Campbell’s columnist page.

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