Is IP infrastructure supplier Sonus Networks on the verge of being acquired?
The Massachusetts-based company has watched service provider customer spending slow down as the economy remains weak, yet it’s operating with almost no debt and more than $350 million in cash equivalents. As a result, industry observers say, Sonus is bound to get through the recession with solid balance sheets. And that expectation, coupled with the attraction of an A-list client roster, is fueling talk that Sonus is ripe for a takeover.
The most likely buyer? Cisco Systems Inc., according to the industry rumor mill.
Consider this: 14 percent of Sonus’ sales come from AT&T Inc., which is trimming its vendor numbers. Cisco remains one of those immediate suppliers, yet, adding Sonus’ AT&T revenue to its financials could only help as the networking giant slogs through the recession. Even though Cisco just announced a 79 percent jump in profit, it’s issuing lower forecasts than investors had hoped and it’s staying cautious on operator outlay. Those outlooks are fomenting fear on Wall Street, since Cisco is viewed as a bellwether for the tech sector overall. Snapping up Sonus would be one way for Cisco to beef itself up inorganically, especially if it nailed the often-complex integration process. And because Cisco has purchased so many companies over the years, it’s not a stretch to think that a Sonus integration would go well.
Reports this week say Cisco would pay about $6 per share for Sonus, more than double Sonus’ closing price of $2.93 on Thursday.
