The $34 billion merger of Lucent and Alcatel, if approved, will unleash a wave of mergers in the telecom equipment sector. Will Cisco merge with Motorola? What will happen to a host of smaller companies? This and more issues are covered in my story, Life after Lucent: telecom feeding frenzy, which is up on CNN Money website.
“This proposed deal is reflection of the resugence of the incumbents not only in the U.S., but worldwide,” says Muayyad al-Chalabi, principal at Boston-based telecom consulting firm Adventis. “This (Lucent-Alcatel merger) could create a domino affect and I hope it does,” says Pip Coburn, chief strategist and principal at Coburn Ventures, a telecom research firm.
The analysts say that Cisco will have to make a move, and going after wireless, by merging with Motorola might be its best bet.
Ericsson, Nokia, and even Nortel are in better shape than ever for making acquisitions, says Coburn. Nortel’s new CEO, Mike Zafirovski, until recently the No. 2 executive at Motorola, could be looking to bulk up his company’s offerings. On his menu could be names like Juniper, Ciena, Tellabs, Sonus Networks and Foundry Systems.
6 thoughts on “Telecom Feeding Frenzy”
if Cisco were to buy Motorola, they would be controlling a huge majority of the STB market. Wonder if the Feds would take that too kindly. The Ericsson-Juniper combine makes a lot more sense now. There was some rumor long back about Cisco buying Nokia. Maybe that wont be such a bad idea too.
i don’t think the feds would be that upset. i think with big deals being approved left right and center, like AT&T/BellSouth, it would not be a problem in the US, though I bet the european regulators might have something to say about this.
i think that the best bet out there would be for cisco to buy nortel. why? nortel has an enormous installed base of pbx gear – both enterprise and carrier. the us federal government installed base is massive and the annual maintenance fees alone could make this a positive cash flow transaction – obviously depending on the price – quite quickly.
cisco is treating voice as the “next next thing” since routing and switching are a) becoming a commodity because b) huwaei and others are aggressively driving prices down. voip is still in the hypergrowth stage and margins are high. buying nortel would simply allow cisco to milk those annual revenues and gradually replace the installed base over time.
Given all the accounting problems, you would have to be very brave, very foolish, or both to buy Nortel. This would be like MCK buying HBOC redux.
How can Coburn say that Nortel is in good shape for making acquisitions? They only have $3B in cash and the stock is floundering.