Under the new strategic deal Ericsson will be able to offer more customers faster data and faster video for smartphones, according to its Swedish chief executive Hans Vestberg.
“Two world leaders in a colllaboration that is going to offer more efficient service to networks,” he told the TT newswire after launching the new partnership on Monday.
Between them, the two industry leaders invest $11 billion annually in development and research, reaching more than 180 countries. Ericsson estimates that the deal with Cisco, headquartered in Silicon Valley, could generate revenues of up to $1 billion by 2018.
“The strength of this partnership lies not just in its scale, but in the depth of the solutions Ericsson and Cisco can now provide to the networking market. It is a market in transition – increasingly mobile, cloud-based, and digital – and customers are seeking end-to-end solutions to reach their full potential,” wrote Vestberg in a blog post.
— Hans Vestberg (@HansV_Ericsson) November 9, 2015
The partnership comes at a time of increased competition and large upheavals among the bigger tech companies on the world market, which has seen giants such as HP selling off its own next-generation businesses as it prepares to split into two companies overseeing PC and corporate services.
The Ericsson-Cisco move comes less than a month after its Finnish competitor, mobile phone giant Nokia, announced it was taking over French rival Alcatel-Lucent in a $17.6 billion acquisition.
Ericsson enters partnership with Cisco. A response to the ALU-NOK merger? https://t.co/6z7rY0qxsg
— Sven Grundberg (@svengrundberg) November 9, 2015
— Camille Mendler (@cmendler) November 9, 2015
But Vestberg dismissed rumours a potential merger could be in the cards for Ericsson and Cisco.
“No, no. First of all, and this is important, it's a strategic collaboration that this is about. We have spent the past 13 months discussing this,” he said.
Ericsson's stocks rose by 2.3 percent on the Stockholm exchange on Monday morning, following news of the move.
Earlier this year, the company reported an unexpected jump in profits, with earnings for the second quarter of 2015 amounting to three billion kronor ($350 million) before tax – well above analysts’ expectations.
It came as a welcome boost for the company, which had recently been undergoing a major restructuring programme, with more than 2,000 posts cut in Sweden in 2015.