Report: Nokia nixes plans for NSN/Alcatel-Lucent deal

Nokia (NYSE:NOK) is not considering a deal between the company's Nokia Solutions and Networks (NSN) unit and rival Alcatel-Lucent (NYSE:ALU) after gauging the possibilities for a transaction, according to a Wall Street Journal report.

The report, citing unnamed sources, said Nokia recently explored whether Alcatel Lucent's wireless and IP-router divisions would fit with NSN, but Nokia has decided not to pursue formal talks right now. Multiple reports in late September said Nokia's board was considering such a move but that no formal talks were ongoing.

Nokia spokesman Doug Dawson declined to comment to FierceWireless. Alcatel-Lucent also declined to comment, according to the Journal.

Alcatel-Lucent has focused on IP and wireless, especially LTE and small cells, as it seeks to transform itself into more of a networking specialist and shed around 10,000 more jobs. Earlier this month the vendor said it is seeking to raise around $2.7 billion in fresh capital via a combination of new shares and debt. Further, the company reported a narrower loss for the third quarter amid rising revenue. The results indicate that the vendor's massive new cost-cutting plan is starting to take hold as it tries to nurse itself back to health as a smaller company.

Microsoft's (NASDAQ:MSFT) deal to buy Nokia's handset business for $7.35 billion is expected to close early next year, and NSN will be by far the largest unit within Nokia and will account for around 90 percent of its sales.  

While a deal might look good on paper, NSN is still in the midst of trying to turn around its own business. NSN has shed many units over the past two years to focus on mobile broadband and is working to maintain stability in its business and focus on growth in wireless.

NSN CEO Rajeev Suri recently told the Financial Times he will not be pushed into any "silly acquisitions" and won't make any major transactions in the short term, but said deals will be something to consider in the long term as NSN continues to improve its finances.

Suri also recently stressed to Reuters it is not always necessary to acquire weaker rivals, adding that: "We don't have to do deals for the sake of deals, just because we have money."

"I am a believer in market forces determining the outcome. I'm a believer in 'just wait,'" he said.

For more:
- see this WSJ article (sub. req.)

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