Additional Observations in Wake of Cisco’s Tandberg Buy

A couple observations surfaced as I read a Wall Street Journal piece today on the deepening competition between HP and Cisco in the wake of the latter’s $3-billion acquisition of Tandberg.

First, as I mentioned in my previous post regarding Polycom’s near-term prospects, Polycom is well placed to benefit from alliances in the videoconferencing-systems market. Companies that had reseller relationships and technology partnerships with Tandberg will reassess those alliances in the aftermath of the Cisco acquisition. Polycom is well positioned to benefit.

Said Polycom CEO Bob Hagerty:

“It’s a great opportunity to get in there and talk to HP.”

Indeed. Even though HP has indicated that it will continue reselling Tandberg gear “for the foreseeable future,” it’s worth noting that HP moved its telepresence operations into its ProCurve Networking business, where there is no love lost for Cisco. I would wager that the ProCurve strategists are spending some cycles thinking about how they transition away from Tandberg.

Something else that caught my eye is the geographic distribution of Cisco’s cash hoard. Cisco has $35 billion in cash, but $29 billion is overseas and can’t be spent in the US without a large tax penalty. Ned Hooper, Cisco’s chief strategy officer, noted that the Tandberg deal was made with overseas cash reserves.

Given the disposition of Cisco’s cash stash and its stated intention to get back on the acquisitions trail, we should look for Cisco to continue shopping for deals outside the US. Perhaps a future post will be devoted to Cisco acquisition candidates in Europe.


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