Cisco tipped to be contemplating buying Nokia

Stuart Corner
Saturday, 10 September 2005 15:27

IT Industry - Deals

According to a report in UK newspaper, The Business, Cisco is considering buying Nokia. The paper reports that Cisco CEO, John Chambers is believed to be interested in merging with a big wireless infrastructure company, and that Nokia has been identified as the most likely target. It claimed that "industry analysts believe Cisco, valued at $US123bn and Nokia, worth $US71bn, would be a perfect fit for one another."

The paper also cited sources in Finland suggesting that Nokia was ripe for a merger after the resignation of CEO, Jorma Ollila, and growing competition from handset makers in the US and Far East. "Nokia is no longer lean and hungry," one Finnish source told the paper. "Ollila and the rest of the board have become fat cats."

The report suggested there was evidence that Nokia "may be shifting strategy from development of 3G and towards wireless local area networks (LAN) supported by Cisco," quoting Finnish wireless consultant Arto Karila saying: "it is interesting that Nokia has recently reversed everything said about wireless LAN."

Nokia shares rose more than three percent following publication of The Business' report. Cisco declined to comment. Nokia reportedly dismissed the article as "pure fabrication based on rumours on the Internet" according to a Reuters report

In contrast to The Business, Reuters cited several analysts as being sceptical about the possibilities of a merger. Reuters also suggested that the deal could be limited to Nokia's network infrastructure business - it is the second largest manufacturer of mobile network equipment after Ericsson.