Cellular communications companies join forces Motorola, Northern will sell equipment


NEW YORK --Two of the world's largest telecommunications companies, Northern Telecom Ltd. of Canada and Motorola Inc. of the United States, said yesterday that they planned to market their equipment jointly to large operators of cellular telephone systems, many of which have been buying equipment from rivals such as AT&T; and LM Ericsson AB of Sweden.

The move is intended to strengthen the competitiveness of both companies, which had competed directly in some digital switches, the giant multimillion-dollar computers that can field thousands of calls.

Northern Telecom, which had revenues of $8.2 billion last year, and Motorola, which had $11.3 billion, are combining their marketing staffs and product lines to design products using the companies' merged expertise.

The 50-50 venture will seek to take advantage of the companies' respective strengths. Northern Telecom is the biggest maker of central-office digital switches, the electronics that can fill an office floor and that compete directly with those of American Telephone & Telegraph Co.

Motorola is the largest maker of radio transmission equipment for cellular operators and cellular telephones, including the popular Micro-tac.

The venture, to be based in the Chicago area, will try to sell to cellular operators in the United States, Canada and Latin America, but not in Europe yet.

The venture will have at least $500 million in revenues in its first year from existing contracts and a staff of 800 to 1,000 consisting of current employees, officials of both companies said at a news conference in Manhattan yesterday.

The companies plan to spend "several hundreds of millions of dollars" to begin the venture, officials said. The money will not come from any new financing, they said, without being more specific.

Analysts say that Motorola, based in Schaumburg, Ill., and Northern Telecom, with headquarters in Mississauga, Ontario, have been losing large contracts in recent years.

The nation's largest cellular operator, McCaw Cellular Communications Inc., for example, recently chose Ericsson switches, rather than Northern Telecom's or Motorola's.

"We're going to give our customers a number of things," said George M. C. Fisher, Motorola's chairman."We're going to give them a lower number of dropped calls, higher number of calls processed per second, less noise and a lower cost profile."

He acknowledged that few details had been worked out and that the venture will involve a complex melding of millions of lines of computer code and other technical matters.

"It's not surprising that at this point they're fairly vague, because they're just trying to head off the competition," said Mark R. Langner, an analyst at Telechoice Inc., a telecommunications market research firm in Montclair, N.J.

"It's a way of saying to customers, 'Don't buy anything just yet because we'll be there, too.' "

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