With a new CEO at the helm, Ericsson is divesting assets that are not part of its core businesses, as it works to return to sustainable growth. Today the company said it will sell its power modules unit to Flex for an undisclosed amount. Earlier this week, Bloomberg reported that Ericsson may also be selling its $1 billion media business.
Ericsson’s power modules business was founded in 1977 and in 1983 the company named the unit’s first on-board DC/DC power module as Ericsson’s product of the year. Today the unit designs and manufactures power supply products for information and communications equipment, including radio base stations, switches and routers, as well as other computing and industrial applications.
The sale to Flex is expected to close during the third quarter and includes Shanghai Ericsson Electronics Corporation, a manufacturing site in China, as well as business assets in Sweden. More than 300 employees and consultants are expected to transfer from Ericsson to Flex Power. Flex has locations worldwide, but Ericsson did not say whether the 300 employees will move.
Media businesses
In April Ericsson reported a $300 million first quarter operating loss for its media businesses, and said it was exploring “strategic opportunities.” According to Bloomberg, Ericsson has retained Morgan Stanley to investigate the sale of the company’s media solutions business and has hired Goldman Sachs to look for a possible buyer for the media services unit. One or both businesses could stay with Ericsson, depending on the outcomes of those discussions.
Ericsson’s new CEO, Börje Ekholm, has said he wants to focus on networks, digital services and the internet of things. It is not clear whether digital services will include Ericsson’s vast media business, which the company has built up over the years through a series of acquisitions. The unit includes the former Tandberg TV and Microsoft Mediaroom, as well as video processing software and video delivery hardware.
Ericsson’s media businesses represent less than 5% of overall company revenue, but in the past they have been seen as strategically important. As recently as last fall, Ericsson board chairman Leif Johansson commended incoming CEO Ekholm for his “solid understanding of both the technology and business implications of the ongoing convergence of telecoms, IT and media.”
Follow me on Twitter.
