Changes in Telecom:

The announcement today that Nokia and Siemens are going to combine their mobile networks operations will create the world’s second largest mobile telecom equipment company.

The new joint venture will has annual sales of $20 billion and corner approximately 20% of the global equipment market just behind the world leader Ericsson which currently has a 26% share. The companies expect cost savings of about $1.9 billion annually.

This combination is another is a series of consolidations in this industry and this will not be the last. This joint venture will put increased pressure on Nortel as it will leave it lagging well behind in market share. This is just another nail in the Nortel coffin laving the company in a seriously lagging position in a market where they had a real opportunity for leadership.

The problem at Nortel is that they do not have any credibility and that will be a major huddle that will have to be over come before any other company will be willing to take a run at them or partner with them.

Nortel may be the next big failure in the tech sector another casualty of over capacity and accounting tricks. Stay away!