For those of you not familiar with British papers, let me tell you that the Sunday versions often come with some juicy gossip (M&A rumors, takeovers, tenders, etc.).  However, unfortunately more often than not, there is also a lot of speculation.  Case in point: The Sunday Business in London, which yesterday had a wild story that Cisco would make a pitch for Nokia.  That must have obviously worked very well from a PR perspective, as today I got a call from a Brazilian journalist seeking my comments on this.  But how likely is this deal?

Anybody that knows anything about the Cisco traditional M&A strategy would tell you that this is just plain speculation to sell some papers, because this is 100% incompatible with the classic Cisco acquisition philosophy: buy small pieces that you can chew and then use the rapid integration GE model.  There are many examples throughout the past few years: Selsius (the IP PBX division of Intecom), Unity (UM division of Active Voice), Geotel, and more recent purchases such as P-Cube, Airespace, Sipura, Topspin, etc.

What all of these companies have in common is that they are small and represent niche plays in areas that Cisco wanted/wants to grow in (again, at the time Cisco made the acquisition -of course, the IP PBX and IPCC grew a lot, but Cisco bought Selsius back in 1999 when IP PBXs were mostly deployed in labs ;-).  Besides being small in size, they all have excellent revenue growth potential, well above Cisco's current 10-15% level.

However, a Nokia buy would curtail Cisco's ability to reach its 10-15% growth target in 2006 (most Wall Street analysts forecast Nokia sales to grow 8% YoY in 2006).  So why so much speculation?  Well, both companies (Cisco and Nokia) did form a small enterprise VoIP alliance, but things never evolved above and beyond this partnership.

So will Cisco go after Nokia?  Not very likely.  And I would dare say that even, per absurdum, if Cisco's new CDO (Charlie Giancarlo) were to embark on a new and more daring M&A strategy, there would be other companies that would better suit Cisco's interest, including Nortel (a very remote possibility, given the massive sea of red/employee layoffs that such a merger would entail, but imagine for a second what Cisco would look like with Nortel's wireline and wireless carrier divisions ;-).  I think at least that one is a juicier Sunday paper read.

There was an interesting note from AFP yesterday about the new CEO of Australia's major telecom incumbent, Telstra, namely Solomon Trujillo, an American recently settled in Australia. Mr. Trujillo stated that Telstra is way over-regulated and that other carriers (such as SingTel-owned Optus) should share the burden of offering services to remote and rural areas.  As a newcomer, he certainly did not temper his statements with some diplomacy, going as far as saying that such requirements for services to outback customers "belong to the last century".  That did not sit very well with the Communications Minister.

The stakes are pretty high - the Australian government is planning to sell its 52% share in Telstra next year (at a price tag of roughly 24 billion US$), and the coalition partner wants the rural service guarantees to remain in force even after the sale.