Swedish communication technology and services provider
) recently signed a conditional agreement with Danish company NKT
Cables to divest its power cable operation. The transaction has
been valued at SEK 250 million ($35.5 million). The transaction
is subject to relevant regulatory approvals and is expected to
close by the beginning of third quarter 2013.
Net sale for the power cable operation, which currently is a
sub-segment of the business unit 'Networks', was SEK 1.5
billion ($0.23 billion) in fiscal 2012.
Currently, Ericsson estimates the transaction to lead to an
approximate net loss of SEK -100 million ($15.39 million). The
loss is likely to adversely affect the operating income of the
'Networks' segment in the third quarter 2013.
As per the terms of the agreement, Ericsson's factory in
Falun, Sweden will be taken over by NKT Cables. In addition,
about 320 employees and consultants, who are primarily based in
Sweden and currently employed by Ericsson will be transferred to
NKT Cables and will form a part of its workforce..
is a global front-line supplier to the energy sector. The company
develops, manufactures and markets high quality cables and
solutions. Management of Ericsson believes that the divested
power cable segment will be able to operate more efficiently as
part of NKT Cables, generating higher revenues. The observation
is based on the fact that power cable business is the primary
focus and core business of NKT Cables.
Recently,Ericsson also signed an agreement with
) to acquire the latter's TV solution Mediaroom business. All
these initiatives are aimed to concentrate more on the technology
business of the company.
Ericsson currently has a Zacks Rank #3 (Hold). Other wireless
equipment stocks worth mentioning are
) and Sonus Networks, Inc.(
), all having a Zacks Rank #2 (Buy).
We consider, 1SEK = USD 0.142
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