Cisco Systems (CSCO) is sitting on $30 billion in cash. "So why did it just sell $4 billion worth of debt on Monday?" wonders Ashlee Vance at The New York Times. Yesterday's borrowing is widely viewed as a sign that Cisco is preparing to make some acquisitions. Cisco bought seven companies last year and currently has a “good pipeline” of potential acquisitions, Chambers said recently. Bloomberg notes that Cisco's last debt offering in 2006 helped pay for the $6.9 billion takeover of Scientific-Atlanta Inc., a maker of television set-top boxes.
Who might Cisco be eyeing? Speculation abounds. Here are some of the names being floated:
- Skype: The Times notes that eBay is rumored to be shopping the IP phone service, while Cisco is said to be focused on consumer electronics and home networking.
- EMC/VMware: This rumor has been around for many months, and it's an intriguing deal prospect, offering the prospect of instant leadership in storage and virtualization. But it's a big gulp, and Cisco is better known for smaller deals.
- The Usual Suspects: This group includes NetApp, Sun Microsystems, Red Hat and BMC, which were all mentioned in the Times coverage.
- Nortel Assets: This was floated at the All About Nortel blog, but commenters are dubious.
- Rackable: This possibility was first mentioned by John Rath. Cisco is known to be preparing an entry into the server business. Rackable (RACK) has some marquee customers, innovative technology (including a container) and a market cap of $117 million. But we've these rumors about Rackable plenty of times before without a deal ever materializing.