Dubious Cisco Rumors Proliferate

Rumors are rife this week of impending technology acquisitions.

Some of these rumors are entirely spurious, started by stock promoters to help them move shares one way or the other. What’s always humorous, at least to me, is that Cisco Systems gets cast as the prospective buyer in so many of these scenarios.

Occasionally, the rumors have a patina of plausibility, which helps keeps them alive.

One of those rumors that seems at least remotely possible involves a Cisco acquisition of McAfee. The reasoning is that Cisco might want to enhance its content-security capabilities, which is at least within the realm of possibility. What Cisco wouldn’t want, however, are the slim margins and uncertain business prospects associated with McAfee’s heavy exposure to the antivirus marketplace. To a lesser extent, that’s also why Cisco has shied away from consummating an increasingly warm relationship with Trend Micro, another company that Cisco has been alleged to be on the cusp of acquiring for quite some time.

I would classify a Cisco acquisition of McAfee as extremely unlikely, and a Cisco acquisition of Trend as unlikely.

Cisco also has been said, in some quarters, to be interested in Check Point. I am not sure how this rumor got started or what sustains it, but it doesn’t make any sense. It’s not going to happen. Check Point doesn’t have anything that Cisco already doesn’t want to own. Cisco already is beating Check Point in most head-to-head competitive engagements in the field, so what’s the point of buying the former firewall pioneer?

Similarly, we hear recurring rumors of Cisco having designs on Nortel Networks. Such rumors have persisted intermittently for more than a few years, and they have never made sense. Cisco typically doesn’t make huge acquisitions.

Yes, it make an exception for Scientific Atlanta, but that was a special case with unusual circumstances. Whereas Scientific Atlanta brought Cisco into a dominant position in the set-top box market, helping Cisco solidify an end-to-end solution set for video-content delivery, what would Nortel bring to Cisco? Not enough to make it interesting, that’s for sure. Nortel has too many unattractive products in markets where it has less than 20-percent market share.

There also have been rumors about Cisco buying F5 Networks. If that were going to happen, it would have occurred several years back, when F5 left Cisco, Nortel and others in the load-balancing dust. Now Cisco is regrouping and taking renewed aim at the application-delivery and -optimization market with products of its own. F5 will continue to represent a solid competitor, but Cisco has concluded that it doesn’t have to own F5, and F5 probably wouldn’t sell to Cisco, anyway.

As the posturing and bidding intensifies around H-3C, the 3Com-Huawei joint venture based in Hong Kong, some have even suggested that Cisco might buy 3Com to gain 3Com’s 51-percent stake in H-3C. That’s preposterous. Cisco is extremely unlikely to be interested in 3Com or in 3Com’s joint venture with Huawei, a company that Cisco sued a few years back over intellectual-property issues.

Another rumor making the rounds is that Cisco might be interested in buying Riverbed Technology. That’s a possibility, but not yet. Cisco hasn’t given up on its own WAN-optimization products and technologies, which have been assembled through acquisitions and internal development, but it might consider a Plan B approach to Riverbed if that vendor continues to outdistance its rivals in a fast-growing space.

What’s Cisco likely to do? It will stick to the script that it has followed successfully for years, buying companies with compelling technologies that can be plugged into existing Cisco product sets in established or emerging markets. A good example was Cisco’s acquisition of VoD-server vendor Arroyo and its announced acquisition today of Ethernet semiconductor vendor Greenfield Networks.

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