Is the Time Right for a Cisco/Ericsson Wedding?

Could "Ciscosson" become a single company rather than an evolving partnership?

The idea that Cisco Systems Inc. (Nasdaq: CSCO) and Ericsson AB (Nasdaq: ERIC), which forged their partnership in November 2015, might merge to create a giant, wide-ranging vendor was floated and shot down in July 2016 by Ericsson's then CEO Hans Vestberg, who said that a marriage of the two companies was "completely off the cards." (See Ericsson CEO: Cisco Merger Not On the Cards and Cisco + Ericsson: From Soup to Nuts.)

But seven months is a long time: Vestberg is no longer CEO, and Ericsson's year, in terms of market and financial performance, didn't improve much as 2017 approached. (See Ericsson Ejects CEO Vestberg, Beginning of the End for Ericsson? and Loss-Making Ericsson Still Short on Vision.)

In addition, and importantly, the Huawei juggernaut that has sent many companies off course in recent years, keeps picking up speed and business, though it may be heading for a few potholes this year. (See Another Bumper Year: Huawei Sales Soar 32% to $74.8B and Is Huawei in for a Bumpy 2017?)

Now Börje Ekholm is in the CEO seat at Ericsson and that changes things: Both Light Reading and our sister publication Telecoms.com have suggested Ekholm is going to be much more open to the prospect of maximizing shareholder value through M&A activity. (See Is Ekholm Ericsson's Savior or Seller?, 10 Key Tasks for Ericsson's New CEO and Cost Cutting Must Continue, Says Ericsson's New CEO.)

And it's only natural, given the ongoing relationship, that Cisco would be seen as being top of the list of companies to talk to about a merger. (See Ciscosson Scores Telco Cloud Deal Down Under and Ciscosson Looks to WiFi for 2017 Boost.)

That idea is not being confined to closed doors: Ahead of the MWC melting pot, where Ericsson builds an entire village to host customers, partners and assorted other visitors (including the media, of course) it's a talking point among those with an interest in Ericsson's future.

That talk won't go away. It will only intensify until such time that either Ekholm or Cisco CEO Chuck Robbins go on the record -- one way or the other.

In the meantime, Ericsson's share price is down nearly 32% compared to a year ago. But the share price is up nearly 19% since Ekholm was announced as the new CEO (in October last year) and is up 3% this month. It closed today on the Stockholm exchange at SEK 53.20.

If you're going to MWC later this month, expect Ciscosson to be on the industry chat menu.

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

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