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Cisco, Nokia Rumour |
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Written by Adam Gosling
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Tuesday, 09 August 2005 |
A Reuters report yesterday saw Nokia pour cold water on the Cisco buys Nokia rumours, but not enough to stop shares in Nokia inching up.
A Nokia spokeswoman, Arja Suominen, told Reuters that the article which appeared in UK publication, The Business, on Sunday seemed to be "pure fabrication based on rumours on the Internet." In fact the original story carried no sources.
While industry pundits and analysts ruminated on the possible synergies between Cisco and Nokia’s handset business, the possibility the deal could be in the making due to Nokia’s wireless infrastructure expertise seemed to be lost on many.
However, it should be remembered that the original report said Cisco's Chief Executive John Chambers was believed to be interested in merging with a wireless infrastructure company and had identified Nokia as the most likely target.
The latest Reuters report points out that Nokia has previously said it has no plans to sell its network infrastructure division which is the world's second-largest after Ericsson. The division had revenues of US$8.07 billion, 22 percent of Nokia's 2004 turnover.
The problem Cisco would have in buying the division might be that Nokia would be concerned about losing influence in the handset space because it didn’t have the infrastructure part of the business, explained one analyst. It would also put it at a disadvantage in developing technology for 3G networks, he told Reuters.
While such a deal might make sense for Cisco, it’s not clear that Nokia would be the right choice: Cisco’s market cap is about US$123 billion, while Nokia's is about US$71 billion. The two are already working cooperatively to enable Nokia handsets to work with Cisco’s VoIP equipment.
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