Fullscreen User Comments
Share on Twitter Share on Facebook Share on LInkedIn Share on GooglePlus

Loading…

Loading…

Loading…

Loading…

Loading…

Nok Nok. Who's there?

It would be surprising if the two companies were not at least talking about the possibilities, so if there wasn't a currently-circulating rumour that Nokia and Alcatel-Lucent were now considering some sort of merger or joint venture, it would clearly be necessary to start one.

Nokia, of course, has just sold off its former crown jewels - the handset business - to Microsoft after a disastrous two year run with Windows Phone. It has spent all its cash reserves and got next to nothing back. New plan.

In the run-up to the inevitable sale, Nokia bought Siemens out of their joint network infrastructure venture, NSN (see - Nokia buys NSN - has it picked a new long-term strategy?), very obviously laying the ground for Plan B - a life without handsets.

So now the thought: what other deals might turn Plan B into a winner? Another 'two turkey' merger of the sort we've seen so often before? Why not?

The thing about these mega-mergers is that we know how badly they seem to perform after the fact, but we don't know how much more badly the partners would have fared had the mergers not happened. To paraphrase Donald Rumsfeld, these are facts we not only don't know, but many of us don't know we don't know. So we don't know.

Alcatel Lucent is still restructuring after its bad run. In fact Alcatel Lucent has spent much of its history struggling with its merger and inspiring itself with new plans and foci. Before its merger with Lucent in 2006 (the old equipment arm of AT&T) Alcatel itself was an agglomeration of national switched telecoms equipment providers from France, Belgium, Italy and Germany (mostly). It fleshed itself out with a plethora of new network technology company buys in the late 90s and early noughties. If it knows about nothing else, Alcatel Lucent and all who sail in her know about upheaval and restructuring.

The case for a merger between the new Nokia and Alcatel Lucent can no doubt be made using hard industrial logic. The two companies have complementary strengths and there will be cost savings and more job-sheddings to hit the bottom line as well.

Size is also important. According to Yankee Group such a tie-up would would create the second-largest network infrastructure player, behind Ericsson and ahead of Huawei,

But perhaps the main thing to worry about here is merger and upheaval fatigue.

The best take so far on that comes from Yankee Group Research VP, Jennifer Pigg:"Imagine being in the auditorium, whether NSN’s or ALU’s, for the announcement of this ‘When Worlds Collide’ strategy. Thousands of minds with a single thought: 'Here we go again'.”

Join The Discussion

x By using this website you are consenting to the use of cookies. More information is available in our cookie policy. OK