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Sep 4 2008   4:09PM GMT

Will IBM acquire Nortel?

rivkalittle Rivka Little Profile: rivkalittle

In case the speculation of a Microsoft-Nortel acquisition wasn’t enough to keep partners talking, now there are rumors that IBM could snap up the networking company, according to Mark Evans at the All About Nortel blog.

Those rumors (and Evans stresses that they are rumors) aren’t exactly shocking. For one, as Evans points out, Nortel is trading at under $6 now. That makes me think two things: 1. If I were Nortel, I might spin these rumors just to raise my share value. 2. (The more likely one) If I were IBM, I would be thinking two words: fire sale. OK, maybe I would be thinking a full phrase: Fire sale on a once-solid company that still has incredible potential.

All that aside, a pairing of IBM and Nortel also wouldn’t be surprising given the history between the two. In the past few years, Nortel has worked desperately to evolve into a nimble communications software firm as opposed to a legacy networking manufacturer (which it still is at its core). In doing so, Nortel has formed a strong unified communications (UC) alliance with Microsoft (hence those partnership rumors), as well as one with IBM.

The IBM-Nortel alliance spawned the Joint Development Center, which researches and develops joint products from the two companies. Nortel’s website says the relationship between the two “focuses on collaborative innovation that leverages IBM’s services and technology capabilities with Nortel’s experience and leadership in communications infrastructure and solutions.”

Bottom line: Both Microsoft and IBM need solid IP telephony and networking equipment in order to make a real run at enterprise UC. Nortel could easily fulfill that need for either of these heavy hitters as they attempt to take on Cisco.

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