Nortel: The Oracle of Networking?

In order to compete more effectively against SAP in the applications space, Oracle CEO Larry Ellison spent most of this decade buying up software companies. Hmmm. What if Nortel Networks uses the same approach to compete head-on against Cisco Systems? A first step could involve Nortel acquiring Avaya. But The VAR Guy thinks Nortel shouldn’t stop there.

Admittedly, acquisitions are never easy. But it’s clear Avaya is in play. The company canceled a financial analyst conference scheduled for May 31 amid reports that Nortel or a private equity firm may pursue a takeover of the networking company.

The IP telephony and networking markets seem primed for a shake-out. Alcatel-Lucent already has its hands full managing its own consolidation. Smaller companies such as 3Com, Exteme and Foundry are getting squeezed by Cisco. Makes you wonder if Nortel is mulling multiple acquisitions.

Still, Nortel isn’t exactly rich with cash. Early reports suggest that a potential Nortel buyout of Avaya would involve Nortel stock. Unless, of course, Nortel’s best friend and Cisco’s new enemy (also known as Microsoft) throws in some cash to help accelerate the deal.