Cisco Prepares to Go Shopping

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.

Cisco has a list of all its acquisitions on its web site, which can be browsed by year or company name.

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About the Author

Rich Miller is the founder and editor at large of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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