French telecoms equipment maker Alcatel is expected to announce that it will buy troubled ATM switch vendor Newbridge Networks on Tuesday, according to renewed industry speculation.
This is not the first time the two companies' names have been linked in this way, but a Canadian newspaper on Thursday reported that the other potential bidders, Ericsson and Siemens, have dropped out of talks, leaving Alcatel as the prime candidate.
Some Wall Street analysts also said they expect Alcatel to make the announcement on Tuesday when Newbridge releases its third quarter results. Analysts polled by First Call predict it will report a profit of 11 cents a share for the three months ended 30 January.
Acquisition speculation has been growing steadily since last November when Newbridge announced a profits warning for its second quarter results. Alan Lutz, the supplier's president, and other senior executives resigned the same day.
Alcatel is a likely candidate because of its aggressive strategy to break into the North American market. Last month it launched the OmniPCX 4400 range of specially designed IP private communications exchanges created by its acquisitions of US firms, Xylan and Packet Engines.
"An acquisition of Newbridge by Alcatel would make sense," said Paul Strauss, analyst at IDC. "But Alcatel needs to acquire router companies, not more switch companies. It needs to acquire terabit and gigabit router companies, or optical networking firms, but ATM is not dead," he added.
Neither Newbridge or Alcatel would comment on the speculation.
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