Speculation is mounting that ambitious networking vendor Enterasys is in talks with rival Extreme Networks about a possible acquisition.

Enterasys has been in bullish mood so far this year, having previously claimed it wanted to position itself as a viable alternative to Cisco in the networking space. Chief executive Mike Fabiaschi has also made no secret of his desire to buy out at least one of his competitors to help facilitate such growth.

Several months ago Fabiaschi said: "We are going to acquire this year. We have always said from the beginning and the market has always said a clear alternative to Cisco would make sense. We think that the next player that can get close to $1bn revenue will start to emerge as a clear number two. We are really going to try to make something happen in 2008 to that end."

Extreme's worldwide revenue last year was $342.8m (£175m) and, although it does not publicly disclose results, Enterasys is thought to be a similar size. The two companies have also sued each other in recent years in various patent suits.

Fabiaschi added: "I think in the next three to four years there's going to be a lot of refreshing and a lot of buying. Companies are going to look to consolidate before a lot of that happens in order to bulk up and be ready for it. 2008 has all the right feelings that it is going to be a year of consolidation."