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.