Cisco's Chambers would welcome Nortel partnership

Cisco Systems Inc. President and Chief Executive Officer John Chambers said Thursday he would welcome a partnership with telecommunications equipment maker Nortel Networks Corp.

"I believe in strategic partnerships. I would love to have Nortel as a partner," Chambers said in a Toronto speech organized by Speakers Forum Inc., according to a news report confirmed by Cisco spokeswoman Terry Anderson. Anderson would not elaborate on the comments.

However, Chambers downplayed the notion that Cisco might buy Nortel.

"I don't know how to do large acquisitions," Chambers said, but he added, "Never say never."

Chambers has said many times that partnerships tend to be less difficult and risky than acquisitions.

William Owens, president and chief executive officer of Nortel, based in Brampton, Ontario, said he had not talked to Chambers about partnerships but Nortel would be open to discussions. His reported comments were confirmed by Nortel.

Chambers' comments, which came during a question and answer session, followed a comment by Owens on Wednesday that Nortel expects to put a growing emphasis on partnerships, according to Nortel spokeswoman Tina Warren.

Nortel shares rose strongly after Chambers' morning speech and were up $0.31, or 7.58 percent, to $4.40, at the end of regular trading. Cisco shares fell $0.52, or 2.18 percent, to $23.36.

A partnership between the two companies might benefit both, as Nortel is much more established in the service-provider equipment business while San Jose, California-based Cisco is stronger in enterprise gear, said Burton Group analyst Dave Passmore.

"I could see why they would view Nortel as not being much of a competitor (in some areas) but instead being someone they would partner with to better crack the service provider space," Passmore said.