Ibexx - Here's an other "Great" Article.....
JW@KSC
INTERVIEW - Cisco sees acquisitions
AMSTERDAM, Reuters via Individual Inc. : Cisco
Systems Inc said on Thursday it was emphatically remaining
on the acquisition trail and saw a potential six to 10 buys a
year, funded out of its $1.0 billion cash pile and via its
shares.
Cisco president John Chambers, in the Netherlands to
announce a new European administration center, said in an
interview acquisitions remained central to Cisco's strategy.
"We will probably acquire a minimum of six, probably
closer to 10, companies a year," he said, indicating it was
unlikely that anything on the horizon would match April's
$4.0 billion swoop for switching equipment firm StrataCom.
"We will probably not make many public acquisitions.
Most of the companies we try to acquire are new
technology areas that we can quickly turn into products and
move through our channels," said Chambers.
"We've got $40 billion of market cap, we use our stock
to buy companies and we've got a billion dollars in cash and
we use part of our cash to buy," he said.
Cisco, which has made more than 80 percent of the
routers used to direct traffic on the Internet, sees
acquisitions as vital as Internet business consolidates --
filling in the gaps left by its own substantial research and
development effort.
"We're spending $600 million in research and
development this next year," said Chambers. "There are so
many opportunities for growth you just cannot do it
yourself."
And the dizzying pace of growth in the Internet market
means acquisitions are vital. "We don't talk about our
business in terms of year over year; we talk in terms of
quarters. You see, just unbelievable evolution in speed in
the market is required to survive," said Chambers.
"If you don't partner, you can't grow fast in this
industry. If you don't acquire and be good at your acquiring,
you can't grow fast enough."
He said Cisco's strategy was being watched closely
throughout the industry and was viewed as a model for
growth -- although he stressed the company had no hidden
secret formula, merely a set of fairly simple rules.
"When you acquire you're really acquiring people. If
you don't keep the people you're not going to be successful.
We're usually acquiring next generation products, not what
they generally have," he said.
Chemistry between the potential partners is also vital,
otherwise new combines could unwittingly begin to compete
with each other, dooming a venture to failure.
"As corny as it sounds, the most important element is
chemistry. If your chemistry or your cultures are different,
you don't touch it. If you're doing large company
acquisitions geographic proximity is very important, as it
allows you to combine companies effectively," Chambers
said.
If Cisco did have a "secret weapon" it would be its low
"attrition" rate, the rate at which it loses employees, he said.
"People like being acquired by Cisco. We get an
opportunity to acquire 50 times more companies than we
acquire. People usually solicit us. When our competitors
start to buy a company I usually get a call from the company
saying we'd rather be acquired by you," he said.
-- Keiron Henderson, Amsterdam Newsroom +31 20
504 5000
[09-26-96 at 14:52 EDT, Copyright 1996, Reuters America Inc.] |
