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Nokia (NOK) Brushes Off Juniper Networks Takeover Rumors

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The rumors that Nokia Corporation (NOK - Free Report) was looking to buy Juniper Networks (JNPR - Free Report) for around $16 billion were making rounds late yesterday.  In fact, the Juniper stock surged in double-digits in after-hours trading, following media reports that Nokia was in talks with Juniper pertaining to its takeover.

The speculations regarding the buyout were, however, put to rest when Nokia issued a statement to the contrary.  In its press release the company declared that "Nokia is not currently in talks with, nor is it preparing an offer for, Juniper Networks related to an acquisition of that company." Following Nokia’s denial, shares of the network-equipment maker lost a lion’s share of its after-market gains.

In fact, rumors pertaining to Nokia taking over Sunnyvale, California-based Juniper to bolster its networks unit are not new. Speculations on this issue had surfaced in 2014 as well. Though the companies did not merge at that time, they inked a deal to expand their alliance for advancing telco cloud.

Though Nokia, which carries a Zacks Rank #3 (Hold), has denied its interest in Juniper, the former has been quite active on the acquisition front. In April 2015, the Finland-based company had acquired Alcatel-Lucent for approximately $16.6 billion. From the buyout, Nokia expects to realize annual operating cost synergies €1.2 billion in 2018. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Also, the licensing and business partnership with Apple (AAPL - Free Report) that was signed earlier this year is a positive for Nokia. Following the deal, the company got an up-front payment in cash from Apple, which boosted Nokia’s balance sheet. Earlier in November, Nokia signed an agreement with China Unicom (CHU - Free Report) to deploy small cells in China.

We are, however, concerned about Nokia’s primary division’s – the Networks unit — below-par performance. What is worse is that the company does not expect this segment to show any recovery in the near future. Currently, it expects the primary addressable market for the Networks unit to decline in the band of 4% to 5% compared with 3% to 5%, projected earlier. In 2018, the market is expected to decline in the band of 2% to 5% as well.

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