Alcatel-Lucent and Nokia Networks reportedly have resumed talks that could result in greater cooperation between the two networking vendors if not an outright merger.
According to a Dec. 18 report in German online news site Manager Magazin, the two companies restarted talks this fall, less than a year after previous discussions were called off. Closer ties or a merger would enable the two European companies to better compete in a market that not only includes traditional rivals like Ericsson but also now is seeing Huawei Technologies make inroads with its portfolio of low-cost products.
A merger also could help the vendors expand their reach into other markets, including the United States.
Citing unnamed sources, the online magazine said that Nokia CEO Rajeev Suri is exploring a range of options to grow the business. Both Nokia and Alcatel-Lucent declined to comment to the media regarding the report. News of the discussions gave Alcatel-Lucent's stocks a boost.
Both Alcatel-Lucent, based in France, and Finnish company Nokia have been undergoing significant transitions over the past couple of years. Alcatel-Lucent has struggled financially since the 2006 merger of Alcatel and Lucent, running through a series of restructuring and cost-cutting initiatives. CEO Michael Combes in July 2013 unveiled the Shift Plan, an effort to transform the company from a general telecommunications equipment vendor to a specialist in IP networking and ultra-broadband access.
The Shift Plan included cutting about 10,000 jobs, shedding businesses and selling various assets in an attempt to save the company about $1.3 billion in expenses and generating another $1.3 billion in revenues by the end of 2015. Most recently, the company sold its enterprise and communications business to Chinese investment company China Huaxin for $255 million.
For its part, Nokia last year bought Siemens' half of the companies' joint networking venture for about $2.2 billion and sold its handset business to Microsoft for $7.1 billion. Nokia over the years had been losing ground to other smartphone vendors, including Apple and Samsung, whose devices run Google's Android mobile operating system. Under Suri, Nokia also has cut jobs and is looking into expanding into new growth areas, including wearable devices.