Why, hello there, Ericsson

In the midst of the turmoil in the networking industry, there is one company that is taking advantage of the situation to increase its presence in the U.S.: Ericsson.

The company not only won the auction for Nortel’s wireless assets with a $1.1 billion bid, but it also recently entered into a seven-year, $5 billion deal with Sprint Nextel to run that carrier’s networks.

About 6,000 Sprint employees will now be Ericsson employees, and when you couple that with the 2,500 employees expected to come with Nortel’s wireless assets and the employees that Ericsson already had, as my colleague Jim Duffy points out, you’re looking at 14,000 Ericsson employees and $5 billion in annual revenue in North America.

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In the midst of the turmoil in the networking industry, there is one company that is taking advantage of the situation to increase its presence in the U.S.: Ericsson.

The company not only won the auction for Nortel’s wireless assets with a $1.1 billion bid, but it also recently entered into a seven-year, $5 billion deal with Sprint Nextel to run that carrier’s networks.

About 6,000 Sprint employees will now be Ericsson employees, and when you couple that with the 2,500 employees expected to come with Nortel’s wireless assets and the employees that Ericsson already had, as my colleague Jim Duffy points out, you’re looking at 14,000 Ericsson employees and $5 billion in annual revenue in North America.

Things aren’t all peachy. Just last week the company missed analysts’ estimates on its quarterly earnings, which dropped 56% from the same period last year, to $111 million. Six months ago, the company was letting go 5,000 employees to cut costs. The fate of the Nortel deal is still undecided. And while Ericsson manages networks for other carriers overseas, Sprint’s 50 million users represent the biggest network for Ericsson so far, a real challenge.

A few Network World readers posted anonymously on our site that they believe Ericsson will keep the Sprint employees for a short time, perhaps a year, and then cut the jobs in favor of overseas workers who will work for less. I guess time will tell on that one.

Personally, I’m surprised that Sprint handed over operations that seem so core to its mission, but observers point out that it needed the money and that it really needed to focus on customer satisfaction and retention, something Sprint has been struggling with for some time. Recently, Sprint got some good news about its customer satisfaction rating.

The upshot is that, with just these two moves, Ericsson is a bigger player in the U.S., and one we will probably get to know a lot better in the years to come.

Read more about wireless & mobile in Network World's Wireless & Mobile section.