CISCO Systems was ready to pick up the pace of mergers and acquisitions as technology company values slumped, its top dealmaker Ned Hooper said.
"We will be active, not hope to be, will be," said Mr Hooper, Cisco's corporate business development senior vice-president. "We continue to use mergers and acquisitions as a key part of our growth strategy. The downturn for us is a big positive."
Few Silicon Valley companies have made more acquisitions than Cisco, the world's largest maker of networking equipment.
The company has bought about 130 businesses in its 25-year history, using them to enter new markets, such as cable set-top boxes and wireless routers for the home. Cisco bought 11 firms in 2007 and five in 2008.
"The pace has slowed a bit as we make sure we do the right deals," Mr Hooper said. "We expect to be active over the next 12 months."
Chief executive John Chambers said in February he planned to use Cisco's $US29.5billion in cash to make purchases. Last month, Cisco bought Pure Digital Technologies, maker of the Flip Video camcorder, for $US590million in stock.
"Bigger companies are saying these are times you gain market share and consolidate your position," said Goldman Sachs analyst Sarah Friar.
"It's the perfect time to sidestep competitors that don't have the size to make these moves."
IBM, the world's largest computer services company, was in talks last week on buying Sun Microsystems for $US9-$US10 a share. The talks fell apart over the weekend because Sun officials said the price was too low, a source said.
Cisco and IBM could be exceptions. The boards of most companies are telling their merger-and-acquisition teams to go slow, said Pete Bodine, managing director of Allegis Capital, a California venture-capital firm.
Suitors are waiting for prices to drop further, while some acquisition targets are holding out for the kind of prices they used to command.
"There's no force compelling anyone to get into the checkout line," Mr Bodine said. "Everyone is just pushing the empty cart up and down the aisle."
Acquisitions of technology companies in the US fell 82 per cent to $US2.2billion in the first quarter of 2009 from a year ago, according to data compiled by Bloomberg. The number of purchases announced fell to 206 from 337.
Mr Chambers has said he wanted to acquire companies with products that helped people work together, as well as businesses in digital video and so-called virtualisation -- software for managing computer servers. Cisco, based in San Jose, California, is also pushing further into systems for data centres, the vast rooms of computers that store company files and information.
That focus may make BMC Software, a Houston-based enterprise software maker, an acquisition target for Cisco, UBS analysts wrote late last month.
NetApp, a maker of storage computers, may also be a takeover candidate, UBS said.
Cisco spokeswoman Kristin Carvell said the company did not comment on rumour or speculation about acquisitions or investments. BMC Software also would not comment, spokesman Mark Stouse said.
NetApp chief executive Daniel Warmenhoven said last month he wanted NetApp to remain a stand-alone firm.
Oracle, the world's second-largest software company, has spent more than $US34.5billion in a buying spree that began in 2005.
Chief executive Larry Ellison told analysts in December he would wait and see on acquisitions. A large purchase would be made if the price was right.
Oracle had $US11.3billion in cash and marketable securities at the end of February.
For now, some buyers and sellers were at an impasse that was likely to last until the second half of the year, said John DiFucci, an analyst with JPMorgan Securities New York.
Buyers could afford to wait longer than sellers, said Enrique Salem, chief executive officer of Symantec, the world's biggest maker of security software. The company has acquired at least 24 businesses over the past five years.
"We can afford to be patient," Mr Salem said. "It's a buyers' market."
Bloomberg
Rochelle Garner | April 07, 2009
Source: AustralianIT.news.com.au
