Merger most foul
August brings holidays, a summer languor and the media's silly season. Nowhere is the tendency worse than in the business pages, where rumours rapidly get promoted to done deals — except perhaps with IT business. A good rumour drives up share prices, harvests column inches, and helps promote a febrile sense of dot-com bubblehood, all for the price of a gin and tonic in the right hand and a word in the right ear.
Monday's crop is typical of the species. News International is supposedly looking at Skype, with a figure of $3bn (£2bn) being mentioned. There's no doubt that the TV side of NI needs a broadband-services strategy; terrestrial broadband will soon deliver everything that the Sky satellite provides and a whole lot more besides. There's a lot of money in delivering voice, media and interactive services on the back of broadcast television, but a massively overpriced VoIP telco with no clear technical roadmap is a very strange place to start.
Cisco buying Nokia is another curious rumour. Cisco is known for four things: owning the backbone, constant attempts to diversify from that, an insatiable hunger for companies which might help it to do so and an indifferent record of realising value as a result. It might reasonably want Nokia's infrastructure business, but it's hard to imagine what it would do with consumer handsets. It's also very hard to imagine a company more relentlessly American than Cisco or one more unashamedly European than Nokia: remember the divorce rate of GI brides. That's before the business of the name: Nokisco? Cokia? Hardly the real thing.
The one story in the current round of rumours that makes sense is Huawei buying Marconi. A match so perfect that even journalists could see it coming, it solves pressing problems for both sides, gives the combined operation a strong basis for growth and isn't founded on fantasy finance. These are simple tests for sanity, as can be easily seen by applying them to HP and Compaq, Time Warner and AOL, or indeed any of the other rumours currently percolating.
Sanity, alas, rarely makes for an August headline. Whatever the results of the mating season, one thing is unarguable. Summer is a great time to fly a kite.