Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is not going to end up owning Alcatel Lucent SA (ADR) (NYSE:ALU) (EPS:ALU) after all. Rumors have been swirling that the soon-to-be cash rich Finnish smartphone maker could be looking for a firm to add to its network infrastructure business. Reports emerging this morning suggest that the deal is no longer likely to happen.
According to The Wall Street Journal’s Sven Grundberg and Sam Schneider, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) decided that the IP-routing and wireless divisions that are currently part of Alcatel Lucent SA (ADR) (NYSE:ALU) (EPS:ALU) are not worth pursuing at this time. The article sourced people familiar with Nokia’s plans.
Nokia building infrastructure
A Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) attempt to acquire all or part of Alcatel Lucent SA (ADR) (NYSE:ALU) (EPS:ALU) could make sense given the company’s current fixation on network infrastructure businesses. Nokia Siemens Networks has been billed as the way the company will make the majority of its money in the future. The company will not be doing that with the help of Alcatel Lucent it appears.
According to the sources in contact with The Wall Street Journal Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) discussed acquiring Alcatel Lucent SA (ADR) (NYSE:ALU) (EPS:ALU) earlier this year at the board level. Although the company seriously considered buying the business the two firms never held talks about the proposition.
The reasons for the Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) decision to avoid a deal with Alcatel Lucent SA (ADR) (NYSE:ALU) (EPS:ALU) are related to the complexity of the French company. Alcatel operates in businesses that Nokia’s infrastructure division has already exited in order to specialize and raise margins.
[drizzle]Alcatel is in the midst of its own restructuring in order to save the company from an ignominious bankruptcy. The firm has been under-performing for years, and its importance as an employer made it an issue for the French government. Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) will avoid the complexities of a restructuring and regulatory oversight by skipping a merger.
Nokia acquisitions incoming
Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) sold its mobile handset division to Microsoft Corporation (NYSE:MSFT) this year, and the company will be swimming in cash when the deal closes. Analysts appear to be expecting the money to be used for a major acquisition designed to bolster the infrastructure business.
Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) may still go in that direction, but it will not be with Alcatel Lucent SA (ADR) (NYSE:ALU) (EPS:ALU). That company will be allowed to run its own affairs for a little longer.
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