Cisco mulls acquiring Nokia, report says

Cisco is reportedly interested in buying Nokia but neither company will comment.
  • John Blau (IDG News Service)
  • 09 August, 2005 08:26

Internet equipment maker Cisco Systems is interested in acquiring Nokia, the world largest manufacturer of mobile phones, according to several media reports citing the Sunday Business newspaper.

A Nokia spokeswoman on Monday declined to comment on the report, which cited unnamed sources.

Cisco spokesman David Cook, while also declining to comment, noted that buying a big company such as Nokia -- which is valued at more than Euro 70 billion (US$87 billion) -- would represent a major shift in the U.S. company's acquisition strategy.

"Of the 103 acquisitions we've made over the past 20 years, almost all of these have been small, technology-rich companies," Cook said. The manufacturer has a history of buying niche companies with specific engineering skills, such as home networking and security, he added.

Still, some analysts wouldn't be surprised if Cisco bought a wireless player.

"Cisco is always looking to expand its portfolio and wireless is a big growth area," said Mark Blowers, senior research analyst at the London office of the Butler Group, a consulting company.

Moreover, convergence of fixed and mobile networks has become a big topic in the telecommunications market and one that could prompt Cisco to seek wireless expertise, according to Blower. "Cisco has a strong fixed-network background, as Nokia does in mobile," he said. "Cisco could expand on its own into this market but wireless is a complex area. A partner would certainly help."

Nokia, which has seen its profit margins erode due to intense competition from manufacturers of low-cost handsets, is accelerating efforts to capture market share in large developing markets such as China and India