Cisco's Crazy Acquisition Binge: Top 10 Buys From The Last Decade

Cisco CEO John Chambers

Photo: AP

Cisco is one of the most acquisitive companies in tech.Over the last 20 years, Cisco has bought more than 140 companies. In the 1990s, most of these purchases were in Cisco’s traditional business: networking, routing, and switching.

But in the last decade, the company began to branch out into “adjacent” areas like consumer video, cable TV set top boxes, and business collaboration.

Now, as the company has reported two disappointing quarters in a row, CEO John Chambers may be pulling back on some of these businesses. Yesterday, the company announced it was cancelling some consumer products, including the Flip cam, which it gained as part of its $590 acquisition of Pure Networks only two years ago.

A trip through Cisco’s 10 biggest acquisitions of the last decade suggests the Flip may not be the only victim when the refocusing is done.

#10: Airespace, wireless network switching, $450 million.

Cisco bought this company for $450 million in stock in January 2005. It made products that helped businesses set up secure wireless networks, and fit into Cisco's core networking and switching business. It also hurt competitors like Nortel and Alcatel, who previously had deals with the company.

#9: Linksys, home networking, $500 million.

This 2003 buy marked the beginning of Cisco's foray into the consumer market. Linksys is still the leading maker of home networking gear.

#8: Pure Digital, consumer video cameras (Flip), $590 million

Cisco shut down the Flip product line yesterday. This acquisition was way outside Cisco's traditional core, but the idea was to encourage consumers to upload lots of video to the Internet, which would eventually require service providers and Web companies to upgrade their infrastructure.

#7: Nuova Systems, data centre networking, $678 million

Cisco first invested in this company in 2006, then purchased the remaining stake in 2008. It provides high-end networking gear for corporate data centres -- a reasonable fit for Cisco's core business.

#6: IronPort, e-mail security, $830 million

Cisco bought this company in 2007 and integrated the technology into a set of appliances for small businesses, who put them at the edge of their networks to catch spam and malware before it gets to users' computers.

#5: Andiamo Systems, switching for storage area networks, $2.5 billion

This one was a pretty clear fit into Cisco's business.

#4: Starent Networks, mobile IP networks, $2.9 billion

Starent provides technology for mobile phone carriers like Vodafone to deliver data over their networks. Cisco bought the company in 2009 for a 20% premium.

#3: WebEx, Web conferencing, $3.2 billion

Cisco vaulted into the business collaboration space with this acquisition of the leading video conferencing provider. Since then, Cisco has expanded its WebEx line to offer services such as hosted email. It's a bit of a stretch for a company that specialises in networking, but the reasoning is that video eats up a lot of bandwidth -- and thus will drive infrastructure build outs.

#2: Tandberg, videoconferencing, $3.3 billion

This Norwegian company was Cisco's biggest rival in corporate video conferencing, so in 2009 Cisco bought it. In a memo last week, CEO John Chambers has named video as one of the company's five priority areas.

#1: Scientific Atlanta, digital cable TV boxes, $6.9 billion

Cisco's biggest acquisition of all time made set top boxes and other gear for cable TV companies. This business is slowing down: last quarter, Cisco said that shipments of TV set top boxes 'continued to be challenged' with sales down 15% from the previous year, to a run rate of about $1.6 billion.

Here's another company with a crazy acquisition history...

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