Finnish wireless-equipment specialist Nokia Corp. on Wednesday commenced its share-exchange offer for Alcatel-Lucent SA shareholders in Paris and New York, betting its $16.6 billion acquisition will allow the new company to better compete in a global race for scale in the business of making telecommunications and Internet gear.
Nokia’s attempt to create a one-stop shop for telecom companies and Internet service providers comes as the company faces heightened competition from new players such as China’s Huawei Technologies Co. Longtime Nordic rival Ericsson AB of Sweden, meanwhile, announced earlier this month it was forging an alliance with Cisco Systems Inc. , to create another broad ensemble in many of the same businesses.
Nokia Chief Executive Rajeev Suri, in an interview, said the Ericsson-Cisco tie-up–short of the full-blown merger upon which Nokia and France’s Alcatel-Lucent are embarking–was a sign that his move was the right one to take.
“That announcement is a validation of our strategy,” he said.
Like Ericsson, Nokia has been under pressure to diversify its revenue stream beyond its core customers, largely telecom operators, and toward big companies outside that sector, like airlines, oil companies and car makers, as well as police and emergency services–all of which are looking for new hardware and software to do everything from better connecting their operations to enabling real-time emergency response.
Full content: The Wall Street Journal
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