Update: Nokia has responded to CNBC's report by stating it's not in buyout talks with Juniper. Juniper gave back most of its after-hours gains following the remarks.

Following the Nov. 29 close, CNBC reported something that some have speculated for years would eventually happen: European telecom infrastructure giant Nokia Oyj (NOK - Get Report) is in talks with router, switch and security hardware vendor Juniper Networks Inc. (JNPR - Get Report) .

Sources state Nokia is offering about $16 billion for Juniper, which suggests a 40%-plus premium to Juniper's close on the 29th. The price is roughly equal to 19 times Juniper's consensus 2018 EPS estimate of $2.15 a share.

As of the time of this article, Juniper shares -- range-bound since 2014 -- are up 21.5% in after-hours trading to $35.90. Nokia is up a few pennies to $5.05. With Juniper having risen 5% on heavy volume ahead of CNBC's report, it looks like some parties knew about deal talks in advance.

Here are some initial thoughts on the report:

1. Nokia's core markets are weak, and Juniper would help it diversify.

Nokia, which last year closed its $17 billion merger with French telecom equipment giant Alcatel-Lucent, is coming off a third quarter in which its core Nokia Networks unit saw revenue drop 9% annually amid weak U.S. and Chinese mobile infrastructure demand. Nokia has also guided for Networks' "primary addressable market" to decline by 4% to 5% in 2017 in constant currency (CC), and by 2% to 5% in CC in 2018.

4G network buildouts are mostly complete, and mobile carriers seeing little or no revenue growth are feeling pressure to keep their capital spending down. Wireline carriers, meanwhile, are pressured by declining voice revenue streams and (in some places) intense broadband competition. And for the spending that remains, Nokia and rival LM Ericsson  (ERIC - Get Report) often face stiff competition from China's Huawei and ZTE, which have a habit of bidding aggressively for large deals.

Juniper isn't exactly immune to these challenges: The company still gets nearly half its revenue from telecom and cable service providers (SPs), and counts Huawei as a rival in its mainstay service provider router business. But thanks to growing sales to cloud giants buying Juniper's core routers and innovative QFX-series Ethernet switches, along with moderate enterprise sales growth, Juniper's sales are expected to rise slightly in 2017 and 2018.

The thought of acquiring substantial and growing non-telco businesses has to appeal to Nokia. Particularly on the cloud side of things, given the pace at which the likes of Alphabet's Google (GOOGL - Get Report) , Facebook (FB - Get Report) and Amazon (AMZN - Get Report) have been upping their capital spending. In addition, for telco cloud infrastructures, Nokia could create solutions pairing its existing cloud offerings with Juniper's.

2. Cisco and Ericsson are in the crosshairs.

In late 2015, Cisco Systems Inc. (CSCO - Get Report) and Ericsson formed an alliance promising to deliver joint solutions encompassing (among other things) Ericsson's mobile infrastructure and service offerings and Cisco's switches and routers. But things haven't quite gone as planned: Though the partnership has yielded some big joint deals, each company's SP sales remain under pressure, and Ericsson recently disclosed the tie-up won't hit its original goal of producing at least $1 billion in annual revenue for each firm by 2018.

By adding Juniper's telecom router, switch and software offerings to its portfolio, Nokia likely sees an opportunity to take share from Ericsson and Cisco as 5G rollouts commence in earnest in 2-to-3 years. As it is, Juniper (#2 in carrier routers) has been taking SP router share from Cisco (#1), and has been one of several firms pressuring Cisco in switching.

A Nokia-Juniper deal could fuel speculation that Cisco and Ericsson might also tie the knot. But Cisco, both via M&A and organic investments, has been trying hard to lower its hardware dependence since Chuck Robbins became CEO in 2015

3. There is some product overlap that will have to be addressed.

Nokia competes against Juniper in the core and edge service provider router markets, and to an extent in the optical networking space. There's also some overlap in the companies' telecom software offerings, including ones targeting growth areas such as software-defined networking (SDN) and network functions virtualization (NFV).

Assuming a deal happens, look for some of these product lines to be shuttered or divested. With regards to routers, one has to assume Nokia's products are most likely to go, given Juniper's top-2 position within SP routing.

4. Depending on deal terms, Nokia's debt ratings could be impacted.

Nokia has been seeing declining sales, sports a $29 billion market cap and had just 2.7 billion euros ($3.2 billion) in net cash and liquid assets at the end of the third quarter. Thus a $16 billion acquisition (perhaps $14.8 billion excluding Juniper's net cash) that's entirely or largely paid for via cash is likely to impact the company's debt ratings, which are currently just below investment-grade.

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At the time of publication, Action Alerts PLUS, which Jim Cramer co-manages as a charitable trust, was long GOOGL and FB.