Ericsson is one of the leading providers of Information and Communication Technology (ICT) to service providers. Over the past 140 years, the company has been a global leader in ICT solutions; from manufacturing some of the first telephones, to managing networks that process 40% of the world’s data.
Through their website, the company announced that it has completed the acquisition of Cradlepoint –the world’s foremost providers and experts in wireless edge 4G and 5G solutions.
The acquisition was done barely two months after Ericsson announced its intention to acquire Cradlepoint. This investment move is a key to Ericsson’s on-going strategy; to get hold of market share in the rapidly expanding 5G enterprise space.
This acquisition is also important to Cradlepoint as it will greatly help the company to expand internationally. The company is expected to start contributing to Ericsson’s operating cash flow in the year 2022. During the acquisition, Ericsson paid about US$1 billion for the company.
Cradlepoint will still operate as a stand-alone subsidiary within Ericsson, and continue to build on the current market momentum. The company will be part of Ericsson’s Business Area Technologies & New Businesses division.
According to the press release, Cradlepoint’s sales for the year 2019 were USD $134 million with a gross margin of 61%. Ericsson’s operating margins are expected to be affected negatively by approximately 1% in the next two years, where a half of the impact will be related to amortization of intangible assets– arising from the acquisition.
Through Cradlepoint’s solutions, companies can connect sites, vehicles, mobile workforces and IoT devices in a simple and secure way. By combining these solutions to Ericsson’s network solution, the company will be able to create a valuable new revenue stream for its customers; by supporting 5G-enabled services for enterprises and at the same time boost returns on investments in the network.
The senior vice president of Ericsson; Asa Tamsons was quoted saying that he was excited to welcome Cradlepoint to the Ericsson family; and that with Cradlepoint’s market-leading solutions, they will strengthen their enterprise offering and take an important step to lead the next wave of enterprise network transformation.