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Cisco VP: M&A Slowdown is Temporary

Light Reading
News Analysis
Light Reading
4/20/2001

BURLINGAME, Calif. -- Cisco Systems Inc. (Nasdaq: CSCO) may have curbed its hunger for new firms during these tumultuous times, but it is not done with acquisitions in the long term, according to Ammar Hanafi, the company’s vice president of corporate development.

Speaking at the NGN Ventures show here, Hanafi remarked that it would be "immoral and unethical" to acquire some firm at the same time Cisco was laying off other workers.

By this time last year, Cisco had acquired nine of the 23 firms it would buy in the year 2000. So far in 2001, Cisco has not added any new firms to its fold. Instead, it’s discontinued a heavily promoted product line and announced it will be cutting 8,500 jobs (see Cisco Kills Monterey Router and Cisco's Inventory Woes Mount).

"This is a very tough time for us at Cisco," Hanafi said. "But once we are through this, we always have and always will look to acquisitions as part of our strategy to get new technologies to the market and to our customers."

When conference host John McQuillan suggested that probably a lot of companies would soon be for sale, Hanafi said, "If they're still around, they'll be for sale."

"The important thing here is to know that we will always look at acquisitions," he added. "When we do, the decision to buy will come down to value and opportunity."

-- Phil Harvey, Senior Editor, Light Reading http://www.lightreading.com

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hippo
hippo
12/4/2012 | 8:32:15 PM
re: Cisco VP: M&A Slowdown is Temporary
that contributed to CSCO's downfall. Too bany bad acquisitions with a high price tag. This also led to LU's and NT's downfall as well.

I hope they've learned a lesson. The game of M&A is NOT to acquired as much as possible; but acquire the best possible...
justcurious
justcurious
12/4/2012 | 8:32:13 PM
re: Cisco VP: M&A Slowdown is Temporary
Like it or not, they have no choice but doing acquisition to keep up with rivals because their internal R&D was not good. They did not invent anything new since the "Old World" routers. There is no doubt that when the market recovers (if it really happens), Cisco will be a much different than before the recession fundamentally
culture
culture
12/4/2012 | 8:32:01 PM
re: Cisco VP: M&A Slowdown is Temporary
If you ask the VP of M&A about whether they will continue to do it, the answer will be very obvious. Of couse they would be doing a lot of M&A whenever they can start doing it again. What do you expect ?

The M&A strategy provides short term fix but is really destroying the company at the core. I think Cisco have some success when they first start to acquire companies. But if you look at their track record for the last three years. They got luck on Cerent. Most of the rest are complete total disaster. It is not just the product could not sell. It also affects morale and culture. It creates internal poltics.
lu-alum
lu-alum
12/4/2012 | 8:31:52 PM
re: Cisco VP: M&A Slowdown is Temporary
You losers make me sick. You think you know how to run Cisco better than Cisco. So in the midst of a broad macro economic trend you take the opportunity to tell Chambers what he's been doing wrong. Real nice. Obviously not every acquisition is going to be a Crescendo, Kalpana, Cerent etc. There will always be some Monteray's and Granites. Gotta better hit rate that LU!

Hey hippo....how many 140BB dollar companies you build lately there cha cha?

Didn't think so.
Karl1
Karl1
12/4/2012 | 8:31:52 PM
re: Cisco VP: M&A Slowdown is Temporary
I fail to see how it is immoral to acquire a firm during a time of layoffs. While Nortel lays off 20,000 their optical staff specifically will increase - all part of the 'gails of creative destruction' as termed by Joseph Schumpeter. Does Cisco think they have a complete product set and that all that ails it is the economy? They have many holes to fill and second-tier products to improve upon. It is a buyers market and I see no better time to utilize thier $18 billion in cash than now.
Scott Raynovich
Scott Raynovich
12/4/2012 | 8:31:51 PM
re: Cisco VP: M&A Slowdown is Temporary
lu-alum needs a cup of coffee... sounds like he's having a bad Monday, eh?
Scott Raynovich
Scott Raynovich
12/4/2012 | 8:31:50 PM
re: Cisco VP: M&A Slowdown is Temporary
When Cisco does go back to acquisitions, who do you think they will acquire?

My hunch is that Cisco will need to merge with a major DWDM optical player. they've won the metro Sonet game, but they still need to play catch up in DWDM. I don't see them doing this on their own.
optical
optical
12/4/2012 | 8:31:49 PM
re: Cisco VP: M&A Slowdown is Temporary
"they've won the metro SONET game"? Have you looked at Fujitsu's metro SONET marketshare? Fujitsu owns the ILEC space (their the ones who spend the $$$$)
Karl1
Karl1
12/4/2012 | 8:31:49 PM
re: Cisco VP: M&A Slowdown is Temporary
I think that acquiring a Hyperchip or next gen router play would make sense. Not sure who they could acquire on the DWDM space (most established players have become much too large) but perhaps a Tellium on the critical optical switch side would make sense. Only Tellium and Ciena are having any success in optical switches and the space will be dominated by a few players given the ecomies of scale in software.
Fred Snarff
Fred Snarff
12/4/2012 | 8:31:49 PM
re: Cisco VP: M&A Slowdown is Temporary
"My hunch is that Cisco will need to merge with a major DWDM optical player. they've won the metro Sonet game, but they still need to play catch up in DWDM. I don't see them doing this on their own."

can you say C I E N A ?
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