Inside the Nokia-Juniper Merger: Nokia’s Perspective
Nokia denied acquiring Juniper
Nokia (NOK) recently broke with its culture of not commenting on market rumors to state that it wasn’t discussing the acquisition of Juniper Networks (JNPR), the US-based (SPY) vendor of networking gear that helps computers to link with the Internet. Cisco Systems (CSCO) is in the same business.
Here’s how Nokia reacted after a CNBC report claimed that the company was preparing a bid for Juniper that could value the company at around $16 billion: “Nokia is not currently in talks with, nor is it preparing an offer for, Juniper Networks related to an acquisition of that company.
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Nokia still interested in acquisitions
There may not be active talks between Nokia and Juniper that could lead to the companies combining, but that doesn’t mean that Nokia isn’t interested in making a strategic acquisition. In any case, Nokia has identified acquisitions as part of its response to a “changing world,” as chairman Risto Siilasmaa recently explained to Bloomberg.
“If you want to make it in this changing world, you can’t lie still…We will continue to move forward as we have done this far and acquisitions are a part of that,” Siilasmaa said.
Need to counter weakness in networks business
In 3Q17, Nokia’s networks unit, which deals in telecom equipment, recorded a 9.0% YoY (year-over-year) fall in revenues. Sales in Nokia’s networks business have been falling recently, as Nokia grapples with soft demand for telecom equipment, because the 4G mobile network rollout has peaked in major markets around the world. Nokia’s fellow Europe-based (EFA) rival, Ericsson, is facing a similar challenge.
It’s possible that acquiring a company like Juniper could help Nokia counter demand cyclicality in its networks business.