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Summary:

In 2008, Cisco Systems, typically one of the biggest shoppers in Silicon Valley bought only four companies, down from about 14 in 2007. In 2009, that stinginess might be coming to an end. In an interview with Barron’s Eric Savitz, Cisco CEO John Chambers noted that […]

In 2008, Cisco Systems, typically one of the biggest shoppers in Silicon Valley bought only four companies, down from about 14 in 2007. In 2009, that stinginess might be coming to an end. In an interview with Barron’s Eric Savitz, Cisco CEO John Chambers noted that Cisco was always aggressive in buying companies during downturns because he thinks that is the best time. “Companies with cash are king, queen and the royal family,” he said, perhaps reminding the that he has $27 billion (in cash and short term investments) to spend.

Chambers told Savitz he expects consolidation in the networking sector, but said he is not interested in buying direct competitors. Makes sense — why buy when you can destroy them with your sales force? Instead, Cisco is focusing its energies on buying companies to expand into the consumer electronics arena. According to Reuters, Chambers has talked about making “stream of acquisitions” with focus on video. Chambers said a good acquisition for Cisco would be company that has 100 people and a product consumers are lining up to buy. While this Apple envy might cost Cisco a few million, for some startups and their backers, Chambers’ words are nothing short of sweet music.

Question for our readers: Which startup(s) should Cisco buy?

  1. Where in the supply chain does cisco see itself in the new world is the question I can’t get answer to. Cisco is not in the iPhone (smartphone) race now. So does it see itself as getting there(though one). Maybe acquire Motorola OR Qualcomm.

    Another one: how about acquiring something like Pandora.com. Isnt Pandora the Consumer equivalent of Webex.

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  2. I think that Twiddla – whiteboarding application as well as Box.net – file sharing/storing application are suitable for Cisco’s upcoming collaborative platform.

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  3. Jesse Kopelman Friday, January 9, 2009

    @Niraj

    Qualcomm would cost way too much. The same thing for buying Motorola in its entirety. You might as well suggest Cisco buy Apple. Besides, it would be stupid to buy all of Moto to get their money losing handset business. Remember, there’s been talk of Motorola PAYING someone to take that division off their hands. Cisco should go after Motorola’s STB division (even if that goes against Chamber’s not wanting to buy direct competitors). It would give them pretty close to a monopoly with cable cos, but not with telcos — so I think the FTC wouldn’t get involved. Moto definitely needs the money and despite the Scientific Atlanta stuff that Cisco already bought being superior, it seems like Cisco hasn’t made much headway out of second place. Of course, it might make even more sense to go in exactly the opposite direction and buy 2Wire. No doubt that’s a better bang for the buck investment, but it is not a sexy big-time deal like Motorola’s STB division.

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  4. CE Companies CSCO could buy:

    - Sling Media
    - RIM
    - Control 4
    - Pandora
    - Vizio (hey, if you’re going to be a CE company – might as well go all the way!)

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  5. CSCO acquisition list:
    * Palm
    * Sports & Entertainment (Can’t say)
    * CRM vendor (i.e. SugarCRM)
    * Video Search & Indexing
    *Middleware IPTV ?
    * Wildcard -Netflix (new tech for video streaming on the TV and not Set Top Box). Also, would allow for content

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  6. “Chambers said a good acquisition for Cisco would be company that has 100 people and a product consumers are lining up to buy”

    This line reminds of the late 1990′s / early 2000 – Cisco and others in their league would buy companies using a formula that went somehting like this – $1 million per “engineer” ( assuming there was a product). Of course that was networking gear – not consumer electronics. So does the recent statement from Chambers mean he is looking for acquisitions in the $100 million range? Or is he talking about being more lavish?

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  7. Harmonic (HLIT) or BigBand Networks (BBND).

    If the focus is on video, one or both of these companies will be bought by Cisco this year. Absolute no brainer.

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  8. In my opinion, Cisco seems well-placed to start delivering software services layered over its own hardware to both enterprise and small business markets. This is a nice multi-segment market (mobile apps, CRM, video, storage, applications, etc.) and Cisco has had experience supporting the management and roll-out all of these services through its hardware sales and software partnerships.

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  9. Also surprising for a company of Cisco’s size, influence, and cash: No CES booth. Although, they had a nice suite at the Venetian I visited last night.

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  10. Outside the Consumer Electronics segment, I believe that Cisco will acquire their strategic partner BMC Software which is an OEM vendor to Cisco in Data Center Automation. I believe that Cisco will want to control the entire data center infrastructure through a bold move into Enterprise Systems Management. This strategic acquisition will be much larger than any other in recent history, if ever.

    Otherwise, Cisco will maintain it’s strategy of acquiring small innovative companies of modest capitalization. Targets would include those hardware firms that optimize the flow and presentation of content. I don’t believe that Cisco is interested in being a content aggregator, much less an originator, but will be interested in delivery. Netflix could fit this model due to it’s recent push into partnerships for online delivery based on it’s subscription model.

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