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Cisco leads tech M&A charge out of downturn

When it comes to Cisco Systems Inc and dealmaking, the prevailing sentiment in Silicon Valley is: You can't predict what Cisco will buy next, but you can see why it fits. The world's largest maker of corporate networking gear is known for its voracious dealmaking appetite, buying dozens of companies every year and digesting them quickly and efficiently to broaden its already wide-ranging business.

Cisco has led the tech industry's charge out of the recession-induced lull in mergers and acquisitions, announcing two big deals in two weeks: wireless equipment maker Starent Networks for $2.9 billion and Norwegian video conferencing maker Tandberg for $3 billion.

Analysts expect the San Jose, California-based company, which ended the last quarter with a cash balance of $34 billion, to keep up the dealmaking pace, especially now that some stability has returned to financial markets.

“The ability to expand in markets where we have been strong clearly has been a big part of what we've done in the past,” Hilton Romanski, Cisco's vice president of corporate development, said in an interview on Tuesday.

“But the other major element is new market entry,” said Romanski, a former JPMorgan (JPM.N: Quote, Profile, Research, Stock Buzz) banker who joined Cisco in 2000 and runs its global acquisition and venture investment strategy.

Cisco, which was founded in 1984, has spent about $56 billion on 174 deals so far, according to Thomson Reuters data. Along with its in-house team, Cisco occasionally uses a range of outside financial advisers, from Barclays PLC to Lazard Ltd.

Many of the acquisitions were start-ups or private companies with assets that bolster Cisco's core business of making switches and routers that direct computer traffic.

But as the networking business has matured, Cisco has forayed into several new interconnected markets, such as Web-based video conferencing and online video. (Reuters)