The White House's battle against China's Huawei apparently involves the Trump Administration suggesting Cisco Systems acquire Ericsson or Nokia, according to The Wall Street Journal. Still, ChannelE2E considers those hypothetical M&A scenarios extremely unlikely.
No doubt, the stakes are high between the United States and China. Both countries want to dominate the shift toward 5G wireless networks. Adding to the drama, the United States alleges that Huawei may secretly work for China's government in some sort of spying capacity. The Trump Administration has pushed that allegation worldwide, attempting to dissuade governments across the globe from using Huawei's gear. For its part, Huawei has repeatedly and firmly denied the spying allegations.
Amid that drama-filled backdrop, U.S. officials -- including National Economic Council Director Larry Kudlow -- have explored multiple scenarios that could involve various consortiums, private equity firms or Cisco acquiring or investing in Ericsson or Nokia to counter Huawei. According to The Wall Street Journal:
"Cisco Chief Executive Chuck Robbins discussed a potential deal to buy all or part of a European equipment firm last year with Mr. Kudlow, the White House economic adviser, though the talks were “more patriotism-driven” than a reflection of Cisco’s merger interest, a person familiar with the meeting said."
Deal? Highly Unlikely
ChannelE2E is equally skeptical about potential Cisco-Ericsson or Cisco-Nokia business combinations. After all, Robbins has focused Cisco's M&A activities on fast-growth SaaS and recurring revenue businesses. In stark contrast, both Ericsson and Nokia are struggling hardware businesses. Earlier this week, Nokia disclosed layoffs plans for the company's Alcatel-Lucent business in France. Also, Ericsson embarked on 25,000 staff cuts back in 2017, according to reports at that time.
Where does all this leave Cisco? The apparent answer involves courtesy meetings and brainstorming sessions with the U.S. government -- but it's a safe bet Robbins will maintain his focus on high-growth market opportunities for partners and customers. Most recently, Robbins fine-tuned Cisco's purpose to "power an inclusive future for all."
