Marking the latest vendor to bug out of the sector, Ericsson said it inked a deal to sell its Lynchburg, Va.- based cable modem business to Canadian firm Aastra Technologies for an undisclosed amount of money.
Ericsson, whose primary cable modem efforts had centered around its PipeRider brand, sold its first unit in mid-2000. Time Warner Cable is among Ericsson's cable modem customers.
"Ericsson is leaving the business since the modem has become a commodity product with low margins, and it is not part of our core business," said Ericsson spokeswoman Kathy Egan. "Therefore, cable modems are not strategically vital for Ericsson."
Cable modems were also on 3Com's list of non-strategic items. Last year, 3Com opted to bolt from the residential cable and DSL modem markets as margins continued to drop to precipitously dire levels.
Before selling the unit, Ericsson essentially tried to buy MSO market share when it dropped unit prices below $100.
For its part, Aastra's business focus is access terminals, said company CFO Brett Allan. In May, the company bought Nortel Networks' MBS Centrix and ISDN terminal units for $28 million, and in September, purchased Lucent Technologies' digital video business for roughly $17 million. The cable modem business brings forth a broadband data access angle.
As the industry moves toward voice, video and data convergence, Allan said, "We're positioning ourselves as a supplier of access devices."
Under terms of the deal, slated to close last month, Aastra will pick up Ericsson's cable modem inventory and assets, and "assume some liabilities," Allan said, noting that Aastra plans to "continue the investment and development [Ericsson] was doing in the cable modem market."
Allan said the Virginia facility will continue to operate, and that Aastra intends to take on a "significant number" of the 100 people employed there.