An Ignoble Experiment

2. Nokia, Samsung extend patent-licensing deal for 5 years

BlackBerry (NASDAQ:BBRY) announced it halted its plans to go private in a $4.7 billion deal led by Fairfax Financial Holdings, its largest shareholder, and will instead receive a $1 billion capital injection form Fairfax and other institutional investors. BlackBerry also effectively ousted CEO Thorsten Heins.

Today was the deadline for BlackBerry and Fairfax to conduct due diligence on their proposed deal and also the deadline for BlackBerry to search for alternative buyers. It appears that the deal with Fairfax, which valued BlackBerry at $9 per share, proved unworkable. Additionally, it appears BlackBerry was unable to find another potential buyer, despite a flurry of reports in recent weeks pegging interested parties ranging from BlackBerry co-founders Mike Lazaridis and Doug Fregin to former Apple (NASDAQ:AAPL) CEO John Sculley to Chinese PC and smartphone maker Lenovo.

BlackBerry's $1 billion injection is expected to be completed within the next two weeks, at which point Heins will step down. Former Sybase CEO John Chen will be appointed executive chair of BlackBerry's board and will be responsible for the strategic direction, strategic relationships and organizational goals of BlackBerry. Chen will also serve as interim CEO pending the completion of a search for a permanent replacement for Heins.

Prem Watsa, the CEO of Fairfax, which holds a roughly 10 percent stake in BlackBerry, will be appointed lead director and chair of the compensation, nomination and governance committee of BlackBerry's board. Watsa had resigned from the board in mid-August, when BlackBerry announced its review of strategic alternatives, to avoid any conflicts of interest. Heins and David Kerr intend to resign from the board.

Fairfax and an unnamed group of institutional investors will invest $1 billion through debentures that can be converted into common shares at a price of $10 a share. However, the news that BlackBerry's plans to go private or find another buyer had collapsed sent the company's shares plunging; BlackBerry's stock was down nearly 12 percent at $6.86 in mid-morning trading.

It's unclear exactly what BlackBerry will do with its $1 billion cash infusion, but Chen told Reuters that one thing the company's won't do is shut down its handset business. "I know we have enough ingredients to build a long-term sustainable business," Chen told Reuters. "I have done this before and seen the same movie before."

"Today's announcement represents a significant vote of confidence in BlackBerry and its future by this group of preeminent, long-term investors," BlackBerry Chairwoman Barbara Stymiest said in a statement. "The BlackBerry Board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders."

Stymiest said that the deal "provides an immediate cash injection on terms favorable to BlackBerry."

"Some of the most important customers in the world rely on BlackBerry and we are implementing the changes necessary to strengthen the company and ensure we remain a strong and innovative partner for their needs," she said.

Even if the Fairfax deal had gone through and BlackBerry had been taken private, or if another buyer had emerged, BlackBerry would still be in dire straits. The company recently posted a $965 million quarterly loss, which was primarily due to a $934 million charge it took related to unsold inventory of its Z10 smartphone. BlackBerry also said it will cut 4,500 jobs, around 40 percent of its workforce.

Most importantly, the company has also signaled it will move away from the consumer smartphone market to focus more on the enterprise segment. Thus far, despite still having an entrenched position in many corporations and governments, BlackBerry's BlackBerry 10 platform has not caught on with users worldwide. According to the latest third quarter statistics from research firm Strategy Analytics, BlackBerry's global smartphone market share has declined from 4.3 percent in the third quarter of last year to just 1 percent in the third quarter of this year.

BlackBerry, could still pursue other scenarios, such as selling off its patents, said Jack Ablin, chief investment officer at BMO Private Bank. "Looks like doors are closing on BlackBerry and they are going to be looking at fewer options," he told Bloomberg.

Heins had been a BlackBerry executive since 2007 and was elevated in January 2012 to the CEO spot to take over for co-CEOs Lazaridis and Jim Balsillie, who had angered investors with sluggish upgrades to the company's products and dwindling market share.

Chen led Sybase from 1998 until SAP bought the company in 2010 and is widely credited with saving Sybase from bankruptcy. As the New York Times notes, Sybase had lost much of its corporate database business to Oracle, IBM and Microsoft (NASDAQ:MSFT). Chen helped turn around Sybase's core business, and then moved it into producing software for creating applications, mainly for the enterprise market, for use on mobile devices and to manage wireless networks.

"I see this as a very positive step. The new management brought in to right the ship will have both a mandate to do so (with a proven track record) as well as more breathing room (with the increased cash reserve)," said industry analyst Jack Gold. "I'd expect to see some significant redirections at BlackBerry over the next 6-12 months as the new management takes hold and new business priorities and directions emerge. John Chen is a non-nonsense CEO who will hold people accountable, and will bring either new growth to the company or position the company to be acquired at a higher premium than it can currently demand. I see this situation as a long-term positive for BlackBerry."

For more:
- see this release
- see this AllThingsD article
- see this Bloomberg article
- see this Reuters article
- see this WSJ article (sub. req.)
- see this NYT article
- see this CNET article
- see this separate AllThingsD article

Read more about: John Chen, Barbara Stymiest
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This week's sponsor is the LTE North America 2013.
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By Phil Goldstein

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3. AT&T's Aio reassures customers as Leap acquisition approaches

Nokia (NYSE:NOK) and Samsung Electronics extended their patent-licensing agreement for another five years, a move that will likely be a boon for Nokia as its sells its handset business to Microsoft (NASDAQ:MSFT) and patents become a more important part of its business.

The Nokia/Samsung agreement was due to expire at the end of 2013. According to Nokia, Samsung will pay additional compensation to Nokia starting Jan. 1, 2014 onwards, and the amount of such compensation will be "finally settled in a binding arbitration," which is expected to be concluded sometime in 2015. Therefore, the terms of the deal were not disclosed. TechCrunch reported that Nokia said the terms of its license agreements are confidential, and that Nokia currently has deals with 50 companies, "including most of the major handset suppliers."

"This extension and agreement to arbitrate represent a hallmark of constructive resolution of licensing disputes, and are expected to save significant transaction costs for both parties," said Paul Melin, chief intellectual property officer of Nokia.

According to AllThingsD, in a statement, Samsung said it has "in essence agreed to extend our cross license agreement with Nokia, and will enter into arbitration to determine the royalty amount."

"This deal demonstrates the opportunities for the new Nokia in intellectual property rights," Sami Sarkamies, an analyst at Nordea Bank AB in Helsinki, told Bloomberg. "It's significant because it relates to Samsung, the client with the biggest potential in such rights. It's good timing for Nokia and shows they will be able to benefit from the device-unit divestment from the first day."

Following the closing of the Microsoft deal, which is expected sometime in early 2014, Nokia's largest business will be Nokia Solutions and Networks, its network infrastructure unit. In addition to NSN, the company hopes its HERE mapping and location services platform, which it will license to other companies, will become more important as more devices are connected to the cloud and connected cars become more of a reality. Finally, Nokia is banking on its Advanced Technologies division to serve as a research and development hub within the company. The Advanced Technologies unit will handle Nokia's patent portfolio and intellectual property licensing.

During its third-quarter results, Nokia said the unit currently generates around $675 million in revenue per year, according to ZDNet, which excludes the $2.23 billion Nokia it will get from Microsoft for a 10-year licensing deal once Microsoft's acquisition of Nokia's handset business closes.

The Nokia/Samsung agreement comes days after a patent consortium owned by Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Ericsson (NASDAQ:ERIC), Sony, EMC and BlackBerry (NASDAQ:BBRY) filed a battery of lawsuits against Google (NASDAQ:GOOG) and Android manufacturers like Samsung, HTC, Huawei and others. The lawsuits stem from the Rockstar patent consortium, which paid $4.5 billion for the 6,000 patents that bankrupt Nortel Networks offered up for auction in 2011.

For more:
- see this release
- see this ZDNet article
- see this Bloomberg article
- see this AllThingsD article
- see this TechCrunch article

Read more about: samsung, Smartphones
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By Phil Goldstein

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4. Alcatel-Lucent seeks to raise $2.7B to fund turnaround efforts

AT&T Mobility's (NYSE:T) prepaid brand Aio Wireless is seeking to assuage customer concerns that their service will be disrupted once AT&T finalizes its purchase of Leap Wireless (NASDAQ:LEAP) and Leap's Cricket prepaid brand.

Last week Leap shareholders voted overwhelmingly to approve the transaction. AT&T expects the deal to close sometime during the first quarter of 2014. The FCC and Department of Justice still need to sign off on the transaction.

Earlier this month AT&T disclosed plans to close its new Aio Wireless prepaid brand if the carrier is successful in acquiring Leap, which offers service through the Cricket brand. "After the transaction's close, AT&T intends to combine the nascent operations of Aio with Leap's existing operations under the Cricket brand name," AT&T said in a recent FCC filing.

In a new company blog post, Aio argued that AT&T's Leap deal will make Aio even better. After the deal is approved, all Aio stores will be rebranded under the new Cricket brand.

"The brand will change but the essence of what we are will not," Aio said. "The new Cricket will build and expand on Aio's premise of creating wireless without compromise and delivering a simpler, more delightful experience to our customers. Providing great devices on a reliable, nationwide network, with a fun, friendly retail experience is what we are all about, and that won't change when we are the new Cricket."

Aio said under the Cricket brand, Aio customers will not see changes in their network coverage, and will not need to change their devices or phone numbers. It's unclear though if Aio or Cricket's pricing will change once the deal is completed.

AT&T launched Aio Wireless in May in a few markets across the country, and then took the offering nationwide last month. Aio currently has more than 230 stores so far in Texas, Florida and Georgia, which are operated by independent dealers. The prepaid brand offers feature phones and smartphones and pricing options ranging from $40 per month to $70 per month. The service is positioned as a response to the likes of Sprint's (NYSE:S) Boost Mobile and Virgin Mobile brands as well as T-Mobile US' (NYSE:TMUS) MetroPCS brand and other prepaid services. AT&T had planned to expand Aio's services to 220 million retail POPs by the end of 2016.

For more:
- see this Aio post

Related Articles:
Leap shareholders approve AT&T takeover
AT&T to shutter Aio Wireless prepaid brand if Leap acquisition is successful
AT&T's Aio aims to be a nationwide prepaid brand, on par with MetroPCS
AT&T to take Aio Wireless prepaid brand nationwide in September
Fate of Aio uncertain in wake of AT&T's acquisition of Leap

Read more about: AT&T Mobility, prepaid
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By Phil Goldstein

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5. Ericsson CTO envisions 20 Gbps speeds for 5G

Alcatel-Lucent (NYSE:ALU) said it is seeking to raise around $2.7 billion in fresh capital via a combination of new shares and debt, as the equipment vendor takes advantage of a rising stock price and optimism that it will be able to reverse its business situation.

The company said it plans to raise $1.29 billion by selling new shares and issuing new bonds worth $750 million. Alcatel-Lucent said it has also secured a commitment for a new $675 million loan. Alcatel-Lucent will price the new shares at €2.10 ($2.83), which is 29 percent below Friday's closing price, according to the Wall Street Journal. That news sent the company's shares down, but the company's stock has almost tripled since CEO Michel Combes took over in April, noted Bloomberg.

"The measures we are announcing today are part of the plan to reinforce the group's balance sheet and restore competitiveness," Combes said in a statement. "Once these operations are complete, Alcatel-Lucent will be able to fully concentrate on implementing its transformation and sell assets."

Last week Alcatel-Lucent reported a narrower loss for the third quarter amid rising revenue. The results indicate that the vendor's massive new cost-cutting plan is starting to take hold as it tries to nurse itself back to health as a smaller company. The vendor posted a net loss of $273 million in the quarter, narrower than the $431 million loss it had in the year-ago period. Net sales increased 1.9 percent to $5 billion and would have increased 7 percent year-over-year at constant currency exchange rates, the company said.

Earlier this month the company confirmed it would cut 15 percent of its workforce, or 10,000 jobs, as part of its "Shift" reorganization plan aimed at slimming down the company as it seeks to become more of a specialist focused on IP networking, LTE and small cells.

"This is clearly an opportunistic decision," James Crawshaw, analyst at S&P Capital IQ, told the Journal in regard to Alcatel-Lucent's financing moves. "It's the honeymoon period for the new CEO so he's taking this opportunity."

The vendor is clearly focused on its LTE business. In the third-quarter, the company said LTE revenues more than doubled year-over-year, and that its LTE overlay strategy is gathering momentum. Indeed, the vendor's momentum was highlighted recently by its win at Telefónica (Alcatel-Lucent won the largest share of the operator's LTE network in Spain) and China Mobile (Alcatel-Lucent was selected as a vendor in the operator's Phase I TD-LTE network and CNT in Ecuador). Further, Sprint (NYSE:S) yesterday revealed that it that it will use equipment from Alcatel-Lucent, Samsung and Nokia (NYSE:NOK) Solutions and Networks for Sprint Spark, its plan to add 2.5 GHz TD-LTE services to its current network.

In a recent interview with FierceWireless, Glenn Booth, vice president and general manager of the Alcatel-Lucent's LTE business, said that more and more carriers now want to use LTE for a specific business purpose, rather than simply just be the first to launch LTE in a market to get a strong lead, which some customers still want. Some operators want to control pricing, introduce new devices or be disruptive. "A couple of years ago, us being strong with LTE was only helping us with customers who wanted to go strong" with LTE and be market leaders. Now, Booth said, there is more variety and hunger for LTE.

Booth said over the last several months Alcatel-Lucent has won 15 LTE deals that are not yet announced, outside of the U.S. market. Almost all of them are for LTE overlay networks, he said, and half are with Tier 1 operators.

Booth said the company's declining GSM and CDMA sales would not hurt it as much as that trend might hit other competitors since Alcatel-Lucent was never traditionally strong in those technologies outside of the U.S. and China. "We don't have as many of legacy commitments and constraints in some ways as our competitors," he said.

For more:
- see this release
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article

Related Articles:
Alcatel-Lucent posts smaller Q3 loss as cost cuts take hold
Sprint testing Samsung, Alcatel-Lucent indoor small cells
Alcatel-Lucent's Combes: 'This company could disappear'
France may try to block Alcatel-Lucent job cuts
Alcatel-Lucent to axe another 10,000 jobs in reorganization plan
Alcatel-Lucent's Shift strategy targets a virtualized future

Read more about: Michel Combes, Glenn Booth
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By Sue Marek

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eBrief | Partnering for DPI Deployment

TOKYO--Although 5G is currently more of a concept than reality, wireless technology leaders like Ericsson (NASDAQ:ERIC) Senior Vice President and CTO Ulf Ewaldsson are already putting together their wish list for the next-gen technology. During an interview with FierceWirelessTech at the Ericsson Business Innovation Forum here, Ewaldsson painted a vision for 5G that he called "a network for a networked society."

Ewaldsson (Source: Ericsson)

Specifically, Ewaldsson said that 5G will help facilitate a world where everything is connected and network download speeds will likely be 20 Gigabits per second or greater. In addition, he said that network latency will have to be less than a millisecond to enable many of the mission-critical applications that are being envisioned today. "Machines will be communicating with each other and they don't need the spinning wheel," referring to the wheel-like icon that is displayed on a screen when the device is pinging the network.

Ewaldsson also said that he believes that today's 4G networks will evolve the point where every terminal on the network, for example, could actually operate like a base station. "Phones will become base stations," he said.

Like many vendors, Ericsson is anxious to put its stake in the ground regarding 5G. The company is part of METIS 2020, which stands for mobile and wireless communication enablers for the twenty-twenty information society. METIS 2020's goal is to "lay the foundation for 5G" and establish Europe as a leader in the technology.

Ericsson's 5G vision may sound familiar--the company isn't the only vendor pushing to make a name for itself in 5G. Nokia Solutions Networks earlier this year released its "Technology Vision 2020" which included six key elements for the 5G network of 2020. Those elements include: enabling 1,000 times more capacity; reducing latency to milliseconds; teaching networks to be self-aware; personalizing the network experience; reinventing telco for the cloud; and flattening total energy consumption.

Also Noted

This week's sponsor is Radisys.

Analysts project DPI in the marketplace will boom in the near term to secure networks and manage available bandwidth. See how carriers are teaming up with vendors for successful deployment. Learn more today!

SPOTLIGHT ON... New report urges FCC to avoid bidding restrictions for broadcast incentive auctions

Now that Tom Wheeler has been sworn in as the new FCC chairman, momentum is likely going to pick up for the agency's incentive auctions of broadcast TV spectrum, which are scheduled to take place sometime next year. The latest salvo in how the auctions should be conducted comes from a report from the Expanding Opportunities for Broadcasters Coalition and the Consumer Electronics Association, which argues against setting restrictions on which carriers can bid for the spectrum broadcasters are expected to relinquish. At the same time, the report calls for an auction structure that will meet "the price expectations of potentially-willing TV broadcast sellers for their spectrum as repurposed for wireless broadband," while maximizing the benefits for consumers and public safety.

The broadcasters' coalition is led by Preston Padden, a former Disney and News Corp. lobbyist who is now an adjunct professor at University of Colorado Law School in Boulder, Colo. Padden retired from Disney in 2009. The coalition said it represents more than 70 TV stations.

The debate the report wades into is not new. T-Mobile US (NYSE:TMUS), Sprint (NYSE:S) and smaller carriers are one side, and AT&T (NYSE:T) and Verizon Wireless (NYSE:VZ) on the other side over how restricted the two larger carriers should be in bidding for the spectrum in the auction. The smaller carriers have argued for caps on how much spectrum AT&T and Verizon can acquire below 1 GHz, limits that the larger carriers have said will deprive the auction of needed revenue. The author of the report, Fred Campbell, former chief of the FCC's wireless telecommunications bureau, argued that maximizing participation is the best way to achieve the auctions' aims.

The report points out that Sprint recently received billions of dollars in investments from SoftBank, and T-Mobile has been successful in acquiring spectrum. The report argues that "these facts are inconsistent with the notion that Sprint and T-Mobile would be unable to compete effectively in the wireless market without auction subsidies from the U.S. government." The study also concludes that a proposal to lower the prices paid to broadcasters for their spectrum licenses by "scoring" TV stations using criteria based on station characteristics such as population covered would give them an incentive to not participate in the auction and pursue alternative options in the marketplace. Release

Quick news from around the Web.

@FierceWireless: RT @allthingsd: Amazon Celebrates the FAA's Nick Bilton Ruling With One-Day Kindle Sale. Article | Follow@FierceWireless

> Sales of Windows Phone devices have overtaken sales of iOS phones in Italy and Microsoft's smartphone operating system is gaining ground in other European countries, according to new survey numbers. Article

> AT&T will sell the Samsung Galaxy S4 Zoom digital camera and smartphone for $199.99 with a service contract. Article

> Shortly after being sworn in as the FCC's new chairman, Tom Wheeler announced its staff positions. Article

> Google's chairman blasted the NSA's spying program. Article

> Sprint's MVNO Ting is reportedly supporting iPhones. Article

> Google's Motorola appears to be preparing to announce the Moto G world phone on Nov. 13. Article

> The FCC announced proposed fines against Conexions Wireless ($18.4 million), i-wireless ($8.8 million) and True Wireless ($5.5 million) for seeking duplicate Lifeline payments for ineligible subscribers. Release (PDF)

> Sprint MVNO Zact, a service from ItsOn, launched today in the more than 400 Best Buy Mobile specialty stores nationwide. Release

> AT&T launched its Digital Life home automation and security service in six new markets. Release

> Apple did not release sales figures for its new iPads. Article

> Henri Lamiraux, an Apple vice president tasked with the company's iOS operating system, has departed the company after 23 years. Article

> Apple CEO Tim Cook penned an article urging Congress to pass legislation protecting gays and lesbians in the workplace. Article

Wireless Tech News

> University researchers are working on a tiny chip that could be used for gesture recognition on smart watches and headsets. Unlike devices that use light to recognize hand gestures, this new approach relies upon sound waves. Article

> SpiderCloud Wireless is using a Broadcom WCDMA/LTE baseband system on chip (SoC) to create a multimode small cell for the enterprise that can offer 3G and LTE services simultaneously. Article

> Ericsson's CTO envisions 20 Gbps speeds for 5G. Article

Telecom News

> AT&T has turned its hiring drive to Wisconsin where it is looking hire 90 people, including 80 technicians, to support the growth of its U-verse TV and broadband services in the state. Article

> Africa's international bandwidth demand will skyrocket at a compound annual growth rate (CAGR) of 51 percent between 2012 and 2019, according to a TeleGeography Global report. Article

European Wireless News

> Announcements on LTE tariffs and promotions as well as network coverage are coming fast and furious from UK operators, with both EE and Telefónica-owned O2 UK saying they have now launched pay-as-you-go tariffs to LTE customers. Article

> Speculation about how Rostelecom will grow its mobile business took a further turn this week after reports suggested the Russian group may enter a deal that would result in its mobile assets being merged with those of rival Tele2 Russia. Article

> Ericsson announced two more LTE contract wins this week as the Swedish vendor continues its quest to build its share of the LTE market in the face of tough competition from Chinese rival Huawei. Article

And finally… eBay apologized for hosting an auction of Holocaust memorabilia. Article

Mobile operators draw a new small cell order in 2014

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