Why Does Cisco Need $4 Billion in Debt?

ciscologoWhy does a company that has nearly $30 billion sitting in its coffers need another $4 billion in debt? When Cisco Systems (s CSCO) announced that it was raising $4 billion from the debt market earlier today, it led to speculation that it might be loading up in order to buy a company or two.

The new debt will help Cisco retire a $500 million floating rate note due later this month. The company will have about $6.5 billion in net cash on hand after the offering, though the total funds available would be $33.5 billion. One can’t rule out the fact that Cisco might use the money to institute a share buyback — its stock has been going nowhere, making it less attractive as acquisition currency.

The New York Times has a list of the potential acquisition targets. Cisco is making two moves — one right (data center) and one wrong (consumer) — but in order to get a toehold in either of them would need to make some acquisitions, especially as it faces long, drawn-out battles with the likes of Hewlett-Packard (s HPQ) and IBM (s IBM). Over the weekend, we came up with a list of companies HP should buy in order to put the hurt on Cisco.

Perhaps you can help make a shopping list for Cisco?