Monday, August 08, 2005

Still Hungry: Networking Giant Mulls Nokia Buyout

Cisco's John Chambers is believed to be interested in merging with a wireless infrastructure company.

Reuters reported late Sunday night that the Finnish phone maker had been identified as the most likely target.

We're still bullish on Nokia, which remains the leader in mobile handsets, holding twice the market share of Motorola, the #2 player.

We are also going to stick to our hold rating on Nokia, even though we think that Nokia will face falling margins due to high competition (as Barrons was quick to point out this past weekend).

Reuters said that "Cisco's mainstay networking market was fast changing with the convergence of fixed-line and wireless networks."

Last time I checked, Cisco lacked the technology needed for sound wireless applications so the merger would make a ton of sense from that end.

Nokia, by the way, just released their answer to Motorola's ultra-thin, Paris Hilton of a phone, the razR.

It's the 8800 and apparently only someone with Paris Hilton's wallet can afford it.

It costs over $600, part of the reason being that it comes with a scratch-resistant screen, the sort of stuff we've only seen on high end watches a la Rolex.

Cisco, which spent the 90's blessing companies with their networking capabilities, now wants to do the same for consumers.

And with $16 billion in cash reserves, Cisco shouldn't have a problem once they pinpoint a target.

We'll keep you posted.

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