There's truth in that. It's also true that companies aiming to be bought will have to slash their asking prices. Yet at the same time, these companies probably will demand more cash, less stock. Steve Workman is chief financial officer of Finisar, an optical networking company that, like Cisco, has grown in part through stock deals. Lately, however, the share of cash in acquisitions has been growing.
Cash is always precious.
But also chilling Cisco's dealmaking is that with its lower stock price, acquisitions financed by stock would dilute shareholders' stake far more than before. Imagine if the deal were done today. By all accounts a masterful marketer, Cisco boasts myriad ways to spur growth once the clouds over the economy and telecom lift. Its spending on internal research also has been surging faster than revenue. Today, Cisco's 7.3 billion shares look like so many notes on the Bear Republic.