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?