LM Ericsson Telephone Company
) recently signed an agreement with
) to acquire the latter's TV solution Mediaroom business for an
undisclosed sum. Through this acquisition, Ericsson intends to
become the leading provider of IPTV (Internet Protocol TV) and
The deal is expected to be closed by the second half of 2013
and Ericsson plans to include Mediaroom into its Business Unit
Located at Mountain View, CA, Mediaroom is the leading
comprehensive platform for video distribution comprising the
world's largest IPTV operators. Its services are offered on
various devices including WiFi set top boxes, Xbox 360, personal
computers, tablets and Smartphones.
The acquisition of the TV business comes at an opportune time
when the global IPTV market is expected to reach 76 million
subscribers in the year 2013. Further, the IPTV market is
currently expected to generate revenues of $32 billion.
According to the company press release, the IPTV market is
expected to have 105 million subscribers with revenue of $45
billion by 2015. Post-acquisition, Ericsson will emerge as the
leading provider of IPTV and multi-screen solutions with a market
share of more than 25%.
The proposed acquisition is a strategic move by Ericsson as it
expects the demand of the TV consumers to grow rapidly, thanks to
the swift technological innovations happening worldwide. The
company believes that this development will continue to drive the
industry. Therefore, such development demands content owners,
broadcasters, TV service providers and operators to rethink their
Furthermore, as per a report given by ABI Research firm, IPTV
market share registered 11.5% growth in 2012 as compared with 10%
in fiscal 2011. It is believed that IPTV will be the next big
thing for the telecom companies. So, investing in the initial
phase is expected to give good results going forward.
) received an industry-winning MPEG-4 AVC HD compression
technology from Ericsson. The technology will be used in Telus'
IPTV service, called Optik TV.
The comprehensive media solution portfolio of Ericsson in the
TV and video category along with an increased focus on consumer
needs is expected to be the foundation for providing services to
end users of the IPTV market.
Ericsson currently has a Zacks #3 (Neutral) and we prefer to
wait and see Ericsson as we see signs of improvement in the
company's performance. Other wireless equipment stock worth a
) having a Zacks #2 Rank (Buy).
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