Cisco Systems is one of the companies sitting on a huge cash pile, giving it the ability to go on an acquisition spree.
Its cash reserves are currently standing at around US$50 billion. That puts it at number 7 in the list of companies with the largest cash on hand – a list that is topped by Apple with a mind-boggling US$158 billion.
Cisco uses the cash to acquire companies depending on what CEO John Chambers thinks will contribute to the company bottomline.
Stock Price: But it has had several failed acquisitions over the last decade, including Linksys, Navini Networks and Flip. They have dragged down the stock price over the years.
Now, though, the stock is on firm ground with Cisco’s prospects looking bright in view of new-generation concepts such as the Internet of Everything / Internet of Things holding sound potential.
Just after its strong showing in its recent quarter, Mr Chambers says the company would be even more aggressive in acquiring companies – http://www.bloomberg.com/news/articles/2015-02-19/cisco-ceo-says-company-will-be-aggressive-acquirer-over-time.
That can put investors on the edge, wondering if the acquisitions will start to bring the stock price down once again.
Mr Chambers, nonetheless, asserts that there is still room for the stock price to surge. “We are at the start of a 5-10-year run,” he adds. That sounds like a very optimistic projection!
G Joslin Vethakumar