Infrastructure giant Ericsson announced it will put the brakes on its CDMA business and will not seek any new customers. The company will instead focus on its line-up of existing CDMA carriers.
“We will not aggressively look for any new customers,” said Ericsson spokeswoman Pia Gideon.
The news comes in conjunction with the shutdown of Ericsson’s CDMA headquarters in San Diego. Ericsson said it will cut around 250 jobs in San Diego due to the closure and will largely move the operation into its W-CDMA group.
The moves cap Ericsson’s long downward spiral in CDMA. The company purchased Qualcomm Inc.’s CDMA infrastructure business in 1999. However, the company largely failed to tap into large U.S. accounts like Verizon Wireless and Sprint. Today, Ericsson controls around 5 percent of the world’s CDMA gear business, way behind market leaders Lucent Technologies Inc. with 40 percent and Nortel Networks Corp. with 20 percent, according to investment banking firm Lehman Brothers.
“Given the difficulty Ericsson has seen over the past few years in penetrating top accounts in the U.S., this move was not totally a surprise,” wrote Steven Levy of Lehman Brothers. The firm makes a market in Ericsson securities.
Ericsson counts CDMA gear deals with the likes of China Unicom and India’s Tata in Asia; BSI Panama and Telecsa in South America; Leap, Alltel, Western Wireless and Rural Cellular Corp. in the United States, and Rostov and Chelyabnisk in Eastern Europe.
Lehman Brothers said Ericsson’s announcement will likely pave the way for further business for Lucent and Nortel.
