re: business model dependant on acquisition:
This works if, and only if, CSCO has a valuation greater than the companies they are acquiring. So, as long as CSCO's valuation declines less than the (generally smaller and/or private) companies they are going to buy, then everything is OK. Also, they have a pile of cash, which now can buy a lot more than in 1999-2000. Chambers recently said that acquisitions would continue unabated, and that private companies they were looking to acquire were now available for 20% of their previous valuations.
Integrating acquisitions is something a lot of companies do badly, but Cisco has shown a consistent track record of doing it well.
One negative is that all the acquisitions has given the Creative Accountants a field day to play games with the numbers. So, not only am I uncertain about future earnings, sales, margins, etc., but I am also uncertain about past reported numbers. Cisco has deferred a lot of costs into the future, a sin all the techs are guilty of. |
