Ericsson (ADR) (NASDAQ:ERIC) Might Face New Competition Soon


Dallas, Texas 10/17/2013 (Financialstrend) – Swedish based Ericsson (ADR) (NASDAQ:ERIC) is a global market leader in mobile telecommunication infrastructure technology. It has a market cap of $41.9 billion with total annual sales in the region of $35.35 billion. On October 14 rating agency Barkley downgraded the rating for the company to underweight while upping its estimations for its competitors like Alcatel-Lucent to overweight. On the back of the downgrade, stock of the Swedish giant slipped by close to 1.9%. Over the past couple of days Ericsson stock has clawed back some of its lost valuation to post a modest 0.54% increase in its market value over the past week. When trading ended on October 16, its shares were trading at $13 per share, up 0.62% over its previous day close.

Market watchers are speculating that the down grade for Ericsson is more to do with the potential of its competitors to pool their resources to take on the current number 1 supplier of telecommunication network infrastructure. Two such competing platforms are gaining strength as per analysts. The first one is the getting together of Nokia and troubled French tech company Alcatel. While this development is still in the realm of speculation, Barley believes that there is substance to the rumour. It has reasoned that it makes business sense for Nokia which is flush with cash (Microsoft shelled out $7.2 billion to buy their handset division) to tie up with the cash starved Alcatel Lucent SA (ADR) (NYSE:ALU).

The second front of competition that Ericson might face is expected to come from the technology network infrastructure firm Cisco. Reading between the lines on Cicso CEO’s public pronouncements over the past few weeks, analysts predict that Cisco would soon be taking Ericsson head on in the mobile base station market through its recent acquisition Ubiquisys.

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