Cisco's Acquisition Strategy
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"Cisco's acquisition strategy supports our efforts to be technology leaders in key markets. We have had no reason to change our acquisition strategy."1
- A Cisco Representative.
"We acquire companies because we believe they will be successful. If we didn't believe in their success, we would not acquire them." 2
- Dennis Powell, Vice-President - Corporate Finance, Cisco Systems.
For the fiscal 2000-01, California-based Cisco Systems Inc. (Cisco), a market leader in the networking business, reported a net loss of $1 billion. Apart from the slowdown in the global information technology (IT) industry and supply chain management problems and several other reasons, industry analysts blamed Cisco's much touted acquisition strategy for its dismal financial performance.
Cisco's acquisition strategy was working well while the IT industry was in its boom phase. However, with the beginning of the slowdown in early 2000 and the overall global economic slowdown, the situation turned bad for Cisco. By late 2000, Cisco's management found that many of its acquisitions were not performing as expected.
1] As quoted in the article, "Can Cisco keep up its shopping spree," by Wylie Wong, in CNET News.com, November 6, 2000.
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