I didn't realise they had stopped acquiring in 1998 also. Odd, that they stop buying when prices are lowest. In industries that have been cyclical for a long time, management has learned to hoard cash in good times, and then buy cheap assets during downturns, so that they go into the upturns with bigger market share. AMAT does an especially good job at this. One way to try and time the bottom in semi-equips, is when AMAT buys a small niche player (when the stocks are 70-90% off their highs). If network equip is going to be cyclical, this is a skill CSCO management needs to learn. Another skill they need to learn, is how to assess the credit quality of their customers. Or maybe just leave that job to the banks.
My guess is, they've done the numbers, and realize their entire current pile of cash is going to evaporate, over the next 12-18 months, so none of it is available for acquisitions. They could still use their stock, though. Yes, I know CSCO is >80% off its highs, but so is everything else in the sector. |
