Doug ---
Somewhere along the way, the debate shifted from deciding which company had more at stake in the alliance to which company's stock would be more affected should it fail. I readily concede the stock issue --- I doubt either company considers short-term fluctuations when negotiating technology critical to its long-term health --- and stand my ground on the strategic importance of NN's products.
Tomorrow's Financial Times has it right:
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Europe March 9 1999
SIEMENS: Company to exploit US ambition
By Richard Waters in New York
Siemens expects to acquire more small US technology companies and create a US salesforce of several hundred people in its effort to establish a presence in the fast-growing data network equipment business, it emerged yesterday.
The German company, as expected, became the latest European telecommunications equipment maker to unveil its strategy for breaking into a business dominated by American companies - though its plans are more cautious than those of its French rival, Alcatel, which last week announced two deals worth a total of more than $2bn.
Yesterday's announcement, which included the purchase of two small US technology companies and an equity investment in a third for a total of about $600m, will also involve a psychologically important shift away from Siemens' home base.
The company had decided to site its worldwide data networking headquarters on the fringes of Boston because of the more advanced technological base and stronger entrepreneurial drive than existed in Europe, said Tony Maher, a Siemens director. "That's the place where the heart is beating right now," he added.
Mr Maher added that Siemens hoped the new US unit, called Unisphere Solutions, would help to transform the culture of the whole group.
"The fact that we are doing this means that we are starting to think differently," he said.
Like other traditional telecoms equipment makers, Siemens was caught out by the speed of the technological revolution that has seen carriers rush to build new, internet-based networks.
Argon Networks and Castle Networks, the Massachusetts-based companies Siemens is to acquire, and Accelerated Networks, a Californian company it has taken an equity stake in, make different components for data networks.
These companies will be combined with Siemens' own telecoms and networking operations in Florida, California and Ottawa to create the new Unisphere Solutions subsidiary.
Siemens is also relying heavily on alliances with 3Com and Newbridge Networks to round out the range of equipment and services it can sell and give it a sales network in the US.
The new business will begin with annual revenues of $200m and 500 employees, making it a minnow compared with the industry leaders such as Cisco Systems, which had revenues of $8.5bn last year.
Other telecoms makers placed bigger up-front bets on the data networking business, including Lucent Technologies, which paid $19.3bn for Ascend, and Nortel, which paid $7bn to acquire Bay Networks.
Siemens said it had earmarked $1bn to back its new US venture, with the remaining $400m or so to support further investments.
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