Cisco CEO hints at Nortel alliance

Cross-selling opportunities are the real reason behind a possible partnership between Cisco and Nortel that sent investors in both companies into a flutter

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By  Stuart Wilson Published  June 28, 2004

Cisco CEO John Chambers put investors in a tizzy when he declared, “Cisco would love to have Nortel as a partner,” at a recent Telecom Summit in Canada. Nortel has confirmed that Chambers met with its new CEO William Owens at the summit. Although Nortel is still grappling with the fallout from accounting scandals, a fully-fledged acquisition of Nortel is not on Cisco’s radar. Rather, the two companies are expected to look at an alliance-based partnership built around ‘preferred supplier’ status, cross-selling opportunities and developing joint go-to-market strategies. Such an alliance with Nortel would provide Cisco with a strong customer base of service providers to push kit through to. The networking giant has been working hard for some time to boost its sales into this customer category and reduce its revenue reliance on large networking deals with corporate clients. A strong partnership with Nortel would also allow Cisco to stamp greater authority on the wireless infrastructure space. Strategic alliances in the networking space are all the rage right now as vendors from both the voice and data space seek to flesh out their offering to customers. While large acquisitions remain off Cisco’s radar, the company has no qualms about picking-up smaller companies with valuable skill sets. The latest to join the Cisco team is router specialist Procket picked up for US$89m in cash. “The addition of Procket’s engineering team to Cisco offers a unique opportunity to accelerate development of silicon and software across Cisco’s next generation routing portfolio,” said Mike Volpi, senior VP and general manager of Cisco’s routing technology group. “Procket has some of the world's foremost designers of sophisticated silicon, software, and network systems with an average of over 15 years of experience in their respective industries,” he added. Procket Networks is a developer of concurrent services routers and has expertise in silicon and software development. The purchase will add a rich intellectual property portfolio and a team of proven silicon and software architects to Cisco’s industry routing technology and products.

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