The newspaper reported that Cisco chief executive John Chambers is believed to be interested in merging with a wireless infrastructure company.
It said that Cisco had identified Nokia as the most likely target, although the US-based firm has previously focused on acquisitions of niche technology players.
However, both parties remained tight-lipped. According to a Nokia spokesman the story is "pure fabrication based on rumours on the internet". Cisco declined to comment.
Nokia has previously stated that it has no plans to sell its networks division, which it considers part of its core business. The unit is the world's second-largest mobile infrastructure maker after Ericsson.
Nokia's networks operation has annual sales of $7.87bn, and made up 22 per cent of Nokia's turnover in 2004.
Cisco, the largest maker of internet equipment, is worth about $123bn, while Nokia's market value is around $71bn.
The Sunday Business said that Cisco's mainstay networking market was changing fast with the convergence of fixed-line and wireless networks, and the company needed technology for intelligent wireless applications which Nokia could provide.
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