Another day, more bad news for Vonage as Verizon has sued the VoIP service provider for patent infringment. So far today, Vonage shares have tumbled another $1.07 to $8.53 - a 50% decline from the IPO issue price of $17. Every $1 that Vonage drops, reduces its market capitalization by $155-million. At some point, it could get low enough for Vonage to become an attractive takeover target - although the Verizon lawsuit may complicate the issue.

If there wasn't enough consolidation pressure within the telecom equipment industry, a mega-deal between Nokia and Siemens will likely up the ante. In a deal that will create a $19.9-billion entity creatively called Nokia-Siemens Networks, Nokia will combine its network business unit with Siemens' carrier business. The new company, which comes in the wake of Alcatel's acquisition of Lucent, will have 60,000 employees but expects to shed 6,000 to 9,000 positions over the next four years.
  Perhaps one of the biggest questions now is what happens to Nortel, which had been rumoured to be exploring a deal with Siemens while there had also been active speculation about a deal (described by Scotia Capital Markets analyst Gus Papageorgiou as "Norkia") with Nokia. Did Nortel CEO Mike Zafirovski get out-maneuvered or simply left sitting on the sidelines while two other players decided to dance? So what does Nortel do now? Maybe it goes after Siemens' enterprise business given Zafirovski is intent on Nortel playing in the market against rivals such as Cisco. Or perhaps Zafirovski will go after some kind of deal with Cisco or Juniper? Or does Nortel try to stay independent (if that's possible) until its makeover is done?
  As for why consolidation is happening, there are a few key factors: competition is brutal so profit margins have been savaged even as overall sales have rebounded. As a result, equipment makers have no choice but to slash costs. (Nokia and Siemens figure they will save $1.9-billion a year). Another factor is  competition from low-cost suppliers such as Huawei and ZTE that can aggressively bid for contracts. To make matters worse, you've got large customers such as SBC and AT&T getting together to shrink the number of equipment buyers.
Update: For other takes on the Nokia-Siemens deal, check out Mathew Ingram, Om Malik and IP Democracy.