Suddenly, wireless firms have found their appetite for acquiring other companies.
In the past few months, industry has witnessed a rash of acquisitions, negating the trend of a few years ago when they shed units they described as inconsistent with their core competencies.
“The long-term trend is toward acquisition,” commented Herschel Shosteck, chairman of the Shosteck Group. “The last three years have been an anomaly.”
The new wave of acquisition is not of the earthquake variety, in which a big player swallowed up another big player. But it is distinguished by the consistency of its modesty and spanning virtually every arm of the industry, from chip to infrastructure, device and content providers.
Big names are involved in many of these announcements. Nokia Corp., Intel Corp., Motorola Inc. and Alcatel Corp. are among the big-name raiders that have looked suspiciously at consolidation among wireless titans. With each of the big vendors and carriers posting upbeat results, the prospect seems dim for larger consolidation moves in the near future.
Motorola recently acquired XtremeSpectrum Inc. to shore up its foray into the ultra-wideband space, a step that it expects to embolden its competition against major industry players with a rival technology. Ever seeking a greater berth in the Wi-Fi space, Intel bought another chipmaker, Mobilian Corp., to enhance its position in cell phones and other handheld devices.
Coming out of a cheerful quarter, Alcatel said it has purchased the network solutions unit of PacketVideo, with a view to pursuing its multimedia dreams (see story on page 12). The acquisition does not include its Device Solutions unit. Alcatel expects to work with PacketVideo to achieve its vision of video communication and content.
Nokia, which had acquired Eizel Technologies in April, also recently acquired Sega.Com to fortify its gaming offering N-Gage. But just this month the Finnish vendor pulled it boldest move and an extraordinary bargain by employing the major staff and president of Tahoe Networks without actually acquiring the company. Tahoe is a wireless gateway company that has been struggling against stronger players like Starent Networks and Megisto.
Although Nokia would not confirm it, speculation has it that it is negotiating to buy Psion, with a view to taking full control of the Symbian operating system. Motorola, which had a part in the company, exited in October to focus on its Java commitments.
Nokia is not alone in the speculation mill. Semiconductor company Broadcom Corp. also is in negotiations to buy Israeli-based Emblaze Systems Ltd., which makes technology for sending video over mobile phones.
Shosteck explained that the industry is on the cusp of rectifying what the slowdown of the last few years halted.
“In the early days of wireless, companies were stand-alone city-by-city systems,” he said. “It took 12 to 16 years before integration was embarked upon. Some of that integration is not complete.”
He said the acquisition falls in line with the pursuit of open standards, joint ventures and alliances in the industry, adding it “reflects the complexity and integration of networks.”
In spite of the trend toward acquisitions, companies are still shedding non-core assets. Motorola sold a mobile-phone factory in Mexico for $18 million to Hon Hai Precision Industry, a Taiwanese contract manufacturer of electronic goods. Alcatel sold its battery company SAFT to Doughty Hanson for $55 million.
