) intends to acquire Tropos, a Silicon Valley-based company engaged
in development and distribution of wireless technologies and
products for distribution area communication networks. The
acquisition will strengthen ABB's distribution automation business
while expanding its scope in sectors like transportation, oil and
gas, and mining. Tropos products will get more customers
globally. The acquisition is expected to close in the third
quarter of 2012.
Tropos' technology and products for wireless IP (Internet
Protocol) broadband networks are efficient for grids and important
outdoor industrial applications. ABB will retain 55 employees of
Tropos after the acquisition. Tropos's main business is in North
America and has its customers in more than 50 countries worldwide.
Tropos acquisition is strategically sound for ABB as it allows it
to attain its goal to develop the distribution automation
The acquisition will allow ABB to enhance its skills in
communication technologies and also develop new technologies.
Further, ABB's portfolio of fixed-wire and radio communication
solutions will be enhanced through the addition of Tropos'
dependable, safe and scalable solutions for wireless
Moving ahead, the emerging markets will be a significant growth
driver for ABB. Demand in mature markets is also expected to
improve. Customer capital expenditures have increased with the rise
in commodity prices. Increased capacity in some later-cycle
infrastructure-related businesses continue to exist. In many
sectors, price stability has been attained and ABB has increased
its prices to offset increasing raw material costs.
However, ABB Ltd's results are likely to be adversely impacted
by macroeconomic weakness as more than 80% of the company's orders
are derived from outside the US. A major competitor of ABB Ltd. is
ABB Ltd. is a Zurich (Switzerland) based power and
automation technology company. The company operates in
approximately 100 countries, structuring its global organization
into five regions: Europe, Americas, Asia, the Middle East and
Africa. A major competitor of ABB Ltd. is Siemens AG (SI).
Currently, we maintain a Zacks #3 Rank (short-term Hold
recommendation) on ABB Ltd.
ABB LTD-ADR (ABB): Free Stock Analysis Report
SIEMENS AG-ADR (SI): Free Stock Analysis Report
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