acquisition machine is lurching back into gear.
The big computer-networking gearmaker says it could pay as much as $2.5 billion for a closely held technology company, according to the 10-Q form it filed with the
Securities and Exchange Commission
Cisco has the option to buy the unidentified company if it achieves specific financial targets. And though the deal isn't certain, if it happens it will close before July 2004. Cisco has paid $53 million of the $84 million total funding it has committed to the development-stage company. At least $100 million more has been committed as part of another stage of financing.
According to the filing, Cisco has expensed $52 million in research and development costs related to its investment in the company. The $52 million is equal to the sum of the unidentified company's net losses.
In March, Cisco
outlined in a 10-Q similar investments in three other closely held companies. Cisco recently agreed to buy two of the companies -- Hammerhead Networks and Navarro Networks -- for a $258 million in stock. Those deals are expected to close next quarter. Cisco expects to acquire the remaining interest in the third company for $150 million within the next three months.
This is the second disclosure by Cisco, which has come under scrutiny for its role as both venture capitalist and occasionally acquirer or customer of companies it finances. The investments also continue to signal that Cisco may be putting its $21 billion in cash to work while most merger activity in the networking sector has slowed considerably.
At the height of its late-'90s buying spree, Cisco was on a pace that had it acquiring an average of nearly two companies a month as a steeply appreciating stock price stoked the company's growth engine. But the industry's slowing sales and rising debt payments essentially stopped networking gear demand growth in its tracks. Cisco has subsequently had to toss out some of its failed purchases.