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Nokia Buys Network Infrastructure Firm

Helsinki, Finland's famous handset maker Nokia Wednesday afternoon shelled out $421 million in stock for Fremont, Calif.'s Amber Networks, which is widely known for its fault-tolerant routing platform.

The purchase is part of Nokia's "FlexiGateway" strategy, whereby the wireless specialist hopes to develop a new carrier grade routing platform for the network edge.

The deal also comes at a time when many technology companies (particularly, it seems, in the storage industry) are turning to IP-based solutions to better shuttle data traffic across mobile networks. Nokia inked the deal because it believes operators will gradually move towards IP-based networks to provide operators the opportunity to control traffic at the edge of their network, where volumes of important information resides to be called upon more quickly.

Privately held Amber Networks is a blip on the networking screen compared to giants Cisco Systems Inc. and Juniper Networks, but its fault-tolerant routers separate it from the rest of the pack, according to Dr. J.T. Bergqvist, senior vice president of Nokia Networks. Routers facilitates communication between Local Area Networks, or LANs, which transmit data at very fast rates. Fault tolerance routers come in handy in the case of device or system failure; if a piece of software or hardware fails, fault tolerant capability allows the network to continue to function.

"Nokia is acquiring Amber Networks for its ability to develop fault-tolerant edge routers," said Bergqvist. "Building on its strong market share established in the 3rd Generation mobile networks, Nokia seeks to extend its leadership into future Intelligent Edge technologies and in the All-IP service integration for carrier grade high-reliability routing."

The deal is payable partly in newly issued Nokia shares and partly in Nokia stock options, for all the outstanding securities of Amber Networks. Amber Networks, which employs 223 people, will integrate with the Network Platforms division of Nokia Networks. No word yet on when the deal will close.

Nokia could use the boost as its handset sales are down in the doldrums. Last week, the firm posted a steep fall in second-quarter profits, which was partly reflected in the Finnish electronics wholesalers' association's report. The study found that sales in Finland, which has world-leading 80 percent mobile handset market penetration, dropped almost 22 percent year-on-year in June to 93,714.