Cisco, Nortel meeting sparks partnership speculation

In a research note this morning, RBC Capital Markets analysts report sources indicating that the executive management of Nortel Networks and Cisco Systems met privately Wednesday in Ottawa after the Canada Telecom Summit. Though the nature of the meeting is unknown, RBC points out that a marketing or reseller partnership between the two companies would be mutually beneficial for both of them.

A Cisco/Nortel partnership would make sense because Cisco’s customer base is about 70% enterprises and 30% service providers, while Nortel’s is the exact opposite, RBC wrote in today’s report. Also, both companies follow a similar technological strategy: IP/MPLS in the core and a multiservice edge.

Cisco already has reseller partnerships with Ericsson and Lucent Technologies. Ericsson sells Cisco routers in Europe and Asia, and Lucent sells Cisco wireless equipment.

“We believe no large acquisitions are pending and that it will take several months for a formal agreement to be announced, if at all,” RBC wrote. “Nevertheless, the two companies have begun a dialogue, and we expect progress to be made over the next several quarters.”