Nokia decides not to buy Alcatel-Lucent part of Business

Nokia decided not to buy part of Alcatel-Lucent (hereinafter referred to as "rung") after careful deliberation, November 20, a person familiar with the Nokia program.

Recently, Nokia inspected rung's IP Routing and wireless services to see if the two sides could reach some sort of deal. Nokia has decided not to engage in formal negotiations with rung on acquisitions, said the person familiar with the matter.

A number of sources said that earlier this year, the Nokia Board had discussed cooperation with rung. But Nokia has never formally negotiated with rung. IP Routing and high-speed wireless network are the core business of rung. Rung spokesman didn't comment.

The merger of Nokia NSN and rung will be complicated. For example, rung recently launched a fiber-optic network business in some of the markets that NSN withdrew. In addition, the recent rise in rung value is due to higher profits than expected and a stronger plan for saving money. Rung's share price has risen nearly 200% this year.

Nokia's cash reserves will grow to nearly 8 billion euros (about 66.5 billion yuan), much higher than Ericsson's, after the deal to sell handsets and services to Microsoft is complete.

As part of a revival strategy, Nokia may consider some form of trading with rung, according to one source. The move by Nokia and rung to some form of trading is one of the few ways in which the mobile communications equipment industry can be merged.

Investment banks and the French Ministry of Finance have been pushing Nokia to make some sort of deal with rung, especially in the case of rung losses. Nokia and rung have been considering cooperation late last year and early this year, people familiar with the matter said.

But now things have changed. Rung's new CEO, Mitchell Combest Michel Combes, has started a turnround plan that will cut 10,000 people worldwide, reorganizing companies around IP routing, cloud computing and wireless broadband networks. In addition, rung will sell non-core assets worth 1 billion of dollars, but one person familiar with the matter said the sale of wireless or IP routing services, or the overall sale of the company, was not considered by the rung. Rung may consider selling an enterprise business unit. Investors have welcomed Combest's turnround plan, rung's share price has risen nearly twice-fold since he became CEO in April. But Combest did not rule out any possibility of selling any business.