Why Does Cisco Need $4 Billion in Debt?

8 thoughts on “Why Does Cisco Need $4 Billion in Debt?”

  1. Very smart move. $4B in debt at 5% and 6%.

    Acquiring companies that have strong cash flow and growing 15% would give them a hell of a pay back. If I was Cisco I would continue to build out the SaaS offerings. Cisco has made it very clear that applications is where the company is heading. My two cents.

  2. debt is cheaper than equity. They are probably buy back the stock. Looks like they might also be retiring higher interest debt for lower interest debt. Not a bad thing to do IMO.

    On the other hand, maybe the cash hoard is stuck oveseas and they have trouble repratriating it without paying significant taxes.

  3. Even though the SaaS movement has been growing for a number of years, I still think it’s a vehicle for corporate espionage. If you can afford to keep your sensitive data internally (i.e. sales, marketing, financial, email), you should.

    The hypothetical Sun acquisition is an interesting one — if you combine Star Office with Postpath, Jabber, and WebEx, you have the beginnings of a complete in-house solution. Add in a PBX (like fonality), a CRM, and some form of clustering/cloud/etc. software (like QLayer), voila — an internal, integrated solution. Or it can be hosted.

    I’ve told a few folks at Google that they should take the search appliance platform and put gmail, apps, maps, etc. on it and sell an “internal SaaS” solution. Perhaps Cisco will lead the way instead.

  4. They should lower prices on the lower end equipment. As a reseller I’m seeing significant push back on the high prices Cisco likes to charge. The argument that they really do make better products doesn’t cut it anymore. When you can do the same thing for less and not have the kitchen sink thrown in a lot of companies are opting to pass on the kitchen sink.

    As an example, Cisco has an excellent low end phone system offering. The only problem is that it’s easily twice as expensive as most of the competitors. Customers laugh at you when you offer that! It was actually affordable it would be a slam dunk!

    Data Center might be where it’s at for the 5% of the IT community that cares but the rest of the market is starting to look elsewhere. Om, Data Center is certainly the juicy buzzword these days but the total market for the big orders is probably less than 100 companies in the US alone. Should they really continue to forsake the SMB market who doesn’t care about Data Center, or the Nexxus line or Telepresence???

  5. Cisco bought a cloud computing company in Australia, bought postpath and launched a worldwide Developer contest with $100K+ in prize money focusing on applications. They may look at buying an applications company eventually and get into that space to compete against Microsoft and Google.

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