5:55 PM -- What if Cisco Systems Inc. decided to acquire the optical division of Nokia Siemens Networks?
The question came up a couple of weeks ago in the optical networking group on LinkedIn. It was just a what-if scenario posed by Gabriel Kerner, a business development manager at Huawei Technologies Co. Ltd..
But Wednesday morning, Bloomberg reported that NSN is indeed "negotiating with buyers to sell some assets," as CEO Rajeev Suri is quoted saying. That could include optical networking (or Carrier Ethernet -- see Can NSN Offload Its Carrier Ethernet Assets?).
So, it's worth asking: Should Cisco be tempted?
Consider what Cisco has to gain. Kerner's original point is that service providers seem to like the idea of a combined management system -- one set of software to control the optical and routed networks. This is what motivated Juniper Networks Inc. to partner up with NSN and, separately, with ADVA Optical Networking. (See Juniper's Packet-Optical Spells M-P-L-S and Juniper Finds Another Optical Partner.)
Cisco is clearly revving up optical again. The company is clearly proud of its CoreOptics acquisition and its 100Gbit/s promise. Then there's Lightwire Inc., the silicon photonics startup Cisco is acquiring. (See Lightwire Points Cisco Toward 100G and Cisco Renews Optical Focus With CoreOptics.)
Even better, from Cisco's point of view, is that NSN could be bought with offshore cash. It would be one more chance for Cisco to needle the U.S. government about the tax on repatriation. Cisco is already saying its hiring and acquisition patterns will gravitate to international sites because of that issue. (See Chambers Floats His Stimulus Plan.)
Cool, huh? What's not to like?
The deal would probably come with thousands more employees than Cisco wants. And laying off workers in Europe is like prying beer from the hands of football fans -- even when it's doable, it's messy.
NSN overlaps Cisco substantially. Even as an assets-only purchase (assuming NSN would go for that), it's likely the biggest motivation would be defensive.
Cisco doesn't like big acquisitions in the first place. Scientific Atlanta comes to mind as a comparison, but that's a business Cisco was entirely absent from. For the amount of integration work it would take, NSN doesn't seem like an ideal target.
I have no idea whether Cisco is even interested in NSN. I'm just amused by the way the pieces do and don't fit together. What would your pros and cons be?
— Craig Matsumoto, Managing Editor, Light Reading