Channel Marker

Aug 5 2008   11:52PM GMT

Cisco will go acquisition hunting in FY ’09 — but not necessarily for EMC

rivkalittle Rivka Little Profile: rivkalittle

Cisco Systems CEO John Chambers said Tuesday that regardless of “challenging macroeconomic times,” the company would make major acquisitions in the coming year — though he didn’t indicate that one of those purchases would be EMC.

Chambers made the comments during a fourth quarter earnings call.

Cisco beat analyst earnings expectations by 1 cent per share for the quarter, posting earnings of 40 cents per share. But Chambers was cautious, lowering growth expectations for the first two quarters of fiscal year 2009 to 8% for Q1 and 8.5 for Q2. Analysts had predicted 9% for Q1. Chambers also chose only to give guidance for the first two quarters of 2009 instead of for the whole year because of economic uncertainty. He did, however, confirm the company’s long-term growth outlook of 12 to 17%.

Part of that long-term growth will be attained by Cisco being “aggressive about moving into new market adjacencies” regardless of the economic slowdown, Chambers said.

In recent days, rumors have been rampant that Cisco would acquire storage leader EMC. The boil of that rumor was turned down to a simmer when Chambers said Cisco would look to acquire smaller companies, but would partner with larger companies. He listed EMC among the larger companies to be partnered with.

“We’ll partner big to big, and acquire big to small, or to medium,” Chambers said. The list of big companies that Chambers said Cisco would partner with also included IBM, Microsoft and Accenture. As for acquisitions, he said the company would go for those “more like a Scientific Atlanta or a WebEx.”

Cisco will look to fuel growth on almost every market front, including home, small business, medium sized commercial business, large enterprise and service provider, Chambers said.

Geographically, Cisco saw its highest growth — 20 to 40% — in emerging foreign markets, though business in the U.S. and some parts of Europe were somewhat slower. That being said, growth in U.S. enterprise sales was 13% in the fourth quarter, up from 6% in the third quarter.

“The large multinationals and financial institutions which were the first ones to decline almost a year ago, in terms of their spending with us now, are doing dramatically better,” Chambers said.

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