The Financial Times article:

 

Cisco and Ericsson want to build what they call “networks of the future”, although will initially focus on selling telecoms customers joint portfolios of products and services in mobility and intellectual property networking. The companies say they will generate $1bn in additional revenue each by 2018.

But some analysts were unconvinced, with one suggesting that the deal was a defensive move in response to the tie-up between Nokia and Alcatel.

Pierre Ferragu at Bernstein said the near-term benefits of the deal would be “merely about reselling and are likely to benefit Cisco”.

He added: “Longer term both partners could benefit on a wider scale, but this would require collaboration to be successful in product development, which is far from guaranteed.”

Mr Chambers, a veteran deal maker who made more than 180 acquisitions while chief executive of Cisco, said the partnership would lead to the companies developing new technology and services and is the new model for the once-acquisitive group. “This will be as important in the next decade as M&A has been in the past two decades,” he said.

He played down the benefits of a full merger, saying that partnership with Ericsson means that the companies can avoid the need to restructure or go through regulatory processes.

The odds are good that [the Alcatel and Nokia merger] will fail

- John Chambers

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“The odds are good that [the Alcatel and Nokia merger] will fail,” he said, pointing to previous examples of large technology mergers that have struggled. “By the time you shake out the efficiencies and get regulatory approval, it’s a two- to three-year process. This industry, the winners and losers, will be decided in three years. I’d love to see a lot of our peers tied up with large acquisitions.”

Mr Chambers pointed to the disastrous combination of Alcatel and Lucent in 2006 as a “gift from heaven”.

Nokia dismissed Mr Chamber’s comments, saying: “The integrated sales team of the new Nokia will look forward to pitching against a Cisco salesperson selling Ericsson products.”

Cisco and Ericsson both provide telecoms network equipment but operate in different segments.

Analysts at CCS Insight said: “The deal will allow the companies to cross-license patents, share development costs and expand their portfolios as customers require improved network management and look for new opportunities in connecting things.”

Cisco approached the partnership with Ericsson as it would have done a full merger. The companies have been working on forming an agreement for 13 months, with teams on both sides spending 2,000 hours in meetings to get the deal done.

 

Mr Chambers said he and Hans Vestberg, chief executive of Ericsson, now “finish each other’s sentences”.