Nokia to pay $421m for Amber Networks

NEW YORK: Wireless telecommunications equipment giant Nokia Corp. on

Wednesday said it agreed to buy privately-held networking infrastructure firm

Amber Networks for $421 million in a stock transaction.

The deal, which is Nokia's first acquisition in some time, comes soon after

the company said it would slash up to 1,000 jobs in its network unit to cut

costs. Fremont, California-based Amber Networks, a telecommunications equipment

firm with 223 employees, will be integrated into Nokia Networks, Nokia's

infrastructure business.

Nokia Networks is Nokia's second-largest unit and comprises about 25 per cent

of its revenues. The unit, along with its rivals Motorola Inc., Ericsson and

Nortel Networks Corp., has been hit by a slowdown in spending by wireless

telephone operators.

Nokia Networks, which has been making an aggressive push to overtake rival

Ericsson particularly in next-generation infrastructure equipment, said the

acquisition will allow Nokia to build a better Internet Protocol-based router.

"Our target is to shape future mobile network architectures and this

acquisition is a logical step in our strategy. Nokia is acquiring Amber Networks

for its ability to develop fault-tolerant edge routers," said J T Bergqvist,

senior vice president of Nokia networks said.

IP-based edge routers are important parts of next-generation mobile networks

as data traffic increases. Operators are switching to more efficient IP-based

networks, which send information in spurts rather than a single flowing circuit

connection.

Edge routers control traffic between the wireless network and the backbone

network which carries information to and from other locations. American

Depository Receipts of Nokia closed up 41 cents at $19.61 on the New York Stock

Exchange ahead of the news.

(C) Reuters Limited 2001.