Nokia Siemens Networks is in talks to acquire Ethernet equipment vendor Atrica Inc. , an industry source said today.

    Israeli news site Globes reported that talks are underway for a $100 million acquisition, and that the deal is set to close soon.

    Our source with knowledge of the negotiations confirmed that the two parties are discussing an acquisition but noted that the deal could still fall through.

    Nokia Siemens declined to comment on what it calls rumor and speculation, while Atrica's senior staff and PR representatives could not be reached and had not returned voicemails as this article was published.

    Atrica, which counts France Telecom SA (NYSE: FTE - message board) and Deutsche Telekom AG (NYSE: DT - message board) among its customers, has been the subject of many takeover rumors, but this time a deal for the Carrier Ethernet switch vendor looks likely. (See Atrica, Orange Add iSAN, FT Heralds Ethernet Breakthrough, Deutsche Telekom Tackles Ethernet, AFS Uses Atrica Gear, IPN Leverages Atrica, Atrica Wins Energie Deal, Sanef Deploys Atrica, Atrica Finds Its Lightpath, KVH Telecom Deploys Atrica, and Cox Deploys Atrica Ethernet Gear.)

    Atrica is believed to be generating $9-10 million in revenues per quarter, but it's unclear whether the company has yet reached break even.

    Stan Hubbard, Heavy Reading analyst and Ethernet expert, is not surprised to hear that Atrica is involved in talks but is surprised that its suitor is Nokia Siemens.

    "This is not much of a surprise from the Atrica side, but the reported Nokia Siemens interest in Atrica raises some questions. Atrica is a bit of an anomaly in today's carrier Ethernet switch/router (CESR) market -- a carrier Ethernet pioneer with industry-leading and award-winning customers such as Optimum Lightpath and Orange Business Services," notes Hubbard.

    "But it has suffered significant market share loss and been overshadowed in the past couple of years, as larger players such as Alcatel-Lucent (NYSE: ALU - message board) and Cisco Systems Inc. (Nasdaq: CSCO - message board) have expanded their customer footprints and outgunned smaller players on the R&D and marketing fronts," continues the analyst.

    And, Hubbard notes, Nokia Siemens already has its own Ethernet gear and other relationships in the market. "This vendor already has the former Siemens/Seabridge Surpass HiD CESR products developed in Israel, and it is a channel partner for Extreme Networks Inc. (Nasdaq: EXTR - message board) switches such as the BlackDiamond 12K."

    So he believes it's Atrica's existing business that the giant vendor fancies. "If we are looking at serious negotiations, my guess is that Nokia Siemens is attracted to some of Atrica's key customers, while Atrica needs the deeper pockets, stronger global sales channels, and greater marketing muscle of Nokia Siemens. I wouldn't be surprised if Atrica is running into trouble bidding for business with major operators who are calling into question its longer-term staying power as a standalone company. Being part of Nokia Siemens would remove that concern from any debate," says Hubbard.

    The purchase price could be something of a sticking point, though. The reported $100 million tag would represent a poor return for the vendor's numerous investors, who have pumped $188 million into the firm since 2000. Atrica's last round was announced in April 2006. The vendor's investors include Vesbridge Partners LLC , GunnAllen Venture Partners , Innovacom , and JK&B Capital . (See Atrica Raises $28M More.)

    Atrica is not the only company linked to an acquisition by Nokia Siemens in recent weeks. (See Is Nokia Siemens Tailing Tellabs?)