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Cisco Prepares to Go Shopping

Cisco Systems (CSCO) has nearly $30 billion incash, but just borrowed $4 million more, which some analysts and pundits see as a sign that the networking giant is about to make some acquisitions.

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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