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Is Cisco pursuing a merger with Nokia? That's certainly what UK newspaper the Sunday Business claimed this weekend.

The paper said Cisco is looking to merge with a network infrastructure provider, and it believes Nokia is the firm CEO John Chambers has in mind.

For all Nokia's success in the mobile phone market, its market capitalisation is rather lower than Cisco's: $71bn to $123bn. Cisco has around $5bn in the bank, too, so a bid would not be out of the question.

The two companies have a long history of co-operation, particularly on VoIP projects.

They have also been rumoured to be looking at merging before. Most recently - February 2005 - Cisco was said to be interested in buying Nokia's infrastructure business, and this could be the source of the latest round of speculation. It makes more sense that Cisco would be interested in that side of Nokia's operation than the whole thing, consumer-oriented phones and all. Nokia's networks business generated sales of €6.5bn ($7.9bn) during 2004, and would provide Cisco with a way of expanding its own wireless networking business. Cisco has already acquired consumer and SME WLAN firm Linksys, and in January this year bought enterprise WLAN specialist Airespace.

Nokia and Cisco have yet to comment on the weekend's speculation, but Nokia's shares were up two per cent this morning, according to news agency Reuters.

The rumours may have been revived following Nokia's management reshuffle pre-announced last week. ®

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