The Sunday Business is no heavy hitter in the world of business journalism, and the relative sizes of the two companies (Cisco’s market capitalization is $123bn, Nokia’s $70bn) puts the idea in the realm of the fantastic, unless the management team at Nokia gave its blessing to such a bid. Even then, the Finnish government would almost certainly have major reservations about any move to acquire the largest single corporate contributor to its GDP, as might the European Union with regard to ownership of the Europe’s largest IT company going to California.
What credence can be given to the story comes from the fact that Cisco has long wanted to increase its dealings with telecoms operators, and that its chief development officer Charles Giancarlo said earlier this year that though known for buying smaller start-ups for their technology, the company would consider a major acquisition in the telecoms equipment arena in order to take part in a much-needed consolidation in that space.
Giancarlo, then still CTO at the San Jose, California-based company, was commenting on the consolidation then underway in the US carrier market, with Verizon buying AT&T, SBC buying MCI, and Sprint buying Nextel. His argument was that in response to this trend, it behoved the suppliers to do the same. It will inevitably cause greater consolidation in equipment markets, he said, and that will be something we have to respond to.
A Cisco/Nortel deal has frequently been the object of speculation, though there are innumerable hurdles there, not least that the Canadian vendor is still emerging from a scandal surrounding its financial reporting. Lucent too might be a potential target, but Nokia would clearly give Cisco a much bigger presence in mobile telephony on both the network infrastructure and the handset side.
