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Cisco's 2016 Performance: The Stock, the Partnership, the Ratings

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Part 2
Cisco's 2016 Performance: The Stock, the Partnership, the Ratings PART 2 OF 5

How Will Cisco’s Partnership with Ericsson Impact Cisco?

Cisco and Ericsson partner in the Wi-Fi segment

Cisco Systems (CSCO) recently announced its partnership with LM Ericsson Telephone Company (ERIC) in the W-Fi (wireless-fidelity) product segment. The two companies are extending their partnership that they announced 15 months ago.

Cisco and Ericsson can sell network systems to telecom carriers, but they can also cater to the requirements of malls, stadiums, and other public places. These places need strong networks to accommodate the rising use of smartphone devices by their customers.

Rima Qureshi, Ericsson’s head of North America, said, “By adding Wi-Fi solutions into the partnership, we will enable our customers to offer best-in-class Wi-Fi in their networks, complemented by our leading 3GPP portfolio and services organization.”

How Will Cisco’s Partnership with Ericsson Impact Cisco?

In a 2015 press release, Cisco and Ericsson announced a major partnership in which both companies would develop new products. The press release also mentioned that the partnership would bring in an incremental revenue of $1.0 billion for both companies in 2018. Under the terms of the partnership, Ericsson will receive patent licensing fees from Cisco.

Competition with Nokia and Huawei

The rollout of 4G (fourth-generation) LTE (Long-Term Evolution) is almost complete in developed markets and is quickly gaining pace in developing markets. Communication equipment companies need to look at other avenues to offset the fall in spending from the United States and Europe.

The Ericsson-Cisco partnership could help Ericsson overcome stiff competition from Nokia (NOK) and China’s (FXI) Huawei in the wireless equipment market.

Cisco and Ericsson have reportedly completed more than 60 deals since the start of their partnership.

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