Cisco wants Nokia?

"Nokia has been identified as the most likely target," the paper said.

Cisco, the largest maker of Internet equipment, is worth around $123 billion, while Nokia's market value is around $71 billion reports Reuters

The paper, which did not reveal the source of its information, said U.S.-based Cisco's mainstay networking market was fast changing with the convergence of fixed-line and wireless networks, and Cisco needed a merger to acquire the technology to create intelligent wireless applications.

While Nokia is the world's largest maker of wireless phones, the company has experienced erosion in profit margins as intense competition forces handset makers to lower prices.

At the same time, Nokia has decided to accelerate efforts to capture market share in large developing markets such as China and India, where the wireless-phone industry is likely to generate the bulk of future growth reports Market Watch