Nest deals?

Rethink IT, Sept, 2005

As we went to press, speculation was rising that Chinese networking giant Huawei would make a bid for UK partner Marconi.

Shares in the troubled UK telecoms equipment vendor Marconi leapt by 13.5% on the confirmation that it was in acquisition talks, with Chinas Huawei considered the most likely bidder by analysts.

"The discussions are at a preliminary stage and there can be no assurance that an offer will ultimately take place," said Marconi in a statement to the Stock Exchange.

By late afternoon the shares were up 36p at 303p. Marconi has been understood to be seeking a buyer since it lost out on a share of the 10bn [pounds sterling] Next Generation Network project at British Telecom, its largest customer. Huawei, which already has a cross-distribution deal with Marconi, did win part of that huge deal, along with seven others.

Huawei is expanding rapidly out of its native country and Marconi would bring it some strong products and customers, even though the UK company clearly now lacks the scale to be a global competitor in its own right.

Perhaps the wildest rumor was that Cisco would make a bid for Nokia. While it would make great sense for Cisco to have a carrier-focused unit as the telecoms world moves towards all-IP, Nokia would be an expensive and culturally difficult acquisition. Cisco is not in the habit of making major purchases, preferring strings of small players, but if it changes that policy, a better bet might be to follow through on the previously rumored bid for Nortel.

Oracle is becoming a serial acquirer itself, since the major deal with PeopleSoft. The latest talk is that it has its eyes on Connecticut-based G-Log, provider of global logistics and transportation software. This would take the software giant's recent acquisition spree into double figures. Other recent purchases include Retek in March, outbidding SAP; ProfitLogic, a maker of retail forecasting software in July; TimesTen, a supplier of real time data management software, also in July; assets of Context Media in August; and Bangalore-based i-flex, a banking software company, a deal that should close in October.