It's nice to imagine that. Yet beyond the gloomy sales forecasts that are fast becoming CEO John Chambers' regular gig, there's another, less appreciated reason why Cisco stock may have more room to fall. Cisco used its stock freely to pay for an acquisition binge that fed its revenues. In its relentless rise, the stock helped to seduce merger targets. In last year's March quarter, it unveiled seven.
Cisco acknowledges the pause but cautions against making too much of it.
Acquisitions are less difficult in a market like this. Startups, she added, now would be happy to be bought out rather than take their chance on an initial public offering. 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.