Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Newbridge Networks -- Ignore unavailable to you. Want to Upgrade?

To: jeff greene who wrote (11533)	5/14/1999 1:09:00 AM
From: pat mudge	Respond to of 18016

Ironbridge notice on Fiber Optics Online: news.fiberopticsonline.com IBD article on Cisco. Amazing the one technology they need, NN has and yet they're not mentioned. I guess it's really not amazing. It happens all the time. <<<< After buying 34 companies in five years, Cisco Systems Inc. Chief Executive John Chambers has his acquisition strategy down to a science. ''It's like picking a partner in life,'' Chambers said the April morning when Cisco acquired company No. 33 -GeoTel Communications Corp. ''If I picked my wife after the first date, I wouldn't have done well. But we got to know each other over the years. We've lasted 25 years.'' Acquisitions are the same, he says. ''You want to understand what are the key ingredients. Then you learn over time no matter how good the financials look or the market share, you don't touch it unless it fits those ingredients.'' Chambers has certainly found the key ingredients to make Cisco the leader in computer networking equipment -mostly by necessity. Cisco's strategy of aggressive growth means it can't develop all the technology it needs. Cisco products support the backbone of the Internet and corporate networks that let users exchange information. The company started out by making and selling routers, which tell data where to go on a network. Cisco's newer products support what Chambers has called ''the new world of integrated data, voice and video communications.'' Cisco Earnings Late Tuesday, Cisco reported yet another double-digit gain in revenue and net income. Sales rose 44% to $3.15 billion in its May 1 third quarter. Income of 38 cents a share was 27% above a year ago. It also declared a 2-for-1 stock split - the eighth split since Cisco came public in early 1990. Acquisitions will play an even more essential role in Cisco's future, says Martin Pyykkonen, an analyst with CIBC Oppenheimer. Bigger firms such as Lucent Technologies Inc. and Nortel Networks Corp. are targeting Cisco's stronghold. In turn, Cisco wants a piece of the lucrative market in voice communications. Voice and data travel over separate networks but soon could move to a single, shared network. All the players are scrambling to buy pieces they lack. ''Acquisitions have been extremely effective in providing technologies to Cisco in a timely manner,'' said Erik Suppiger, an analyst at Hambrecht & Quist. Cisco follows a strict acquisition formula. It looks at companies that share a similar vision, chemistry and culture. Geographic proximity and short-term wins are also on the list. ''That sets our direction and drives our strategy,'' said Ammar Hanafi, Cisco's director of business development. And this is where Cisco's competitors fall short, Chambers says. ''I believe that most of the acquisitions that are being done by Alcatel, Siemens, Ericsson, Lucent and Nortel will fail miserably,'' Chambers said. Last year Cisco bought a record nine companies and this year there could be more, Hanafi says. It has already acquired four firms. ''If you look at their revenue, close to half comes from acquired products,'' said Chris Stix, an analyst with Cowen & Co. He adds that, with only a few exceptions, Cisco has bought companies its customers wanted it to buy. ''They've been very smart about it, in my view,'' Stix said. Cisco's in its third wave of acquisitions, analyst Pyykkonen says. This year it's all about voice technology, such as moving voice traffic over the Internet. ''What remains to be seen is if they bought those companies at exactly the right time,'' Pyykkonen said. ''Is it going to be a huge market for voice? Again, it's too early to tell.'' It could be a year or two before that's determined, he says. Cisco currently needs a high-end asynchronous transfer mode (ATM) switch for the core of the network, Pyykkonen says. This speedy equipment sits in the heart of a huge network run by a telephone carrier or Internet service provider. Cisco has had product delays in this area, including canceling development for an ATM core product this month. Cisco needs an ATM core switch to compete with the combined forces of Lucent and Ascend Communications Inc. Cisco's ATM core switch is due out the first quarter of 2000. ''Right now, you'd have to give Lucent-Ascend an edge, but not much of an edge,'' Pyykkonen said. The next six to nine months could be a critical time because that's when sales of these ATM products could be made, Pyykkonen adds. ''You don't want to get locked out of a product cycle.'' >>>>>>>