The three things are so intertwined, in fact, that if any one of them falters, as the share price has been doing, the other two are likely to stumble as well. Typically, Cisco acquires a company developing a new technology a year or so before its first product goes on the market. Cisco uses the year to incorporate the acquired company's product into its own product line. A successful takeover goes from negligible revenues in the year before joining Cisco to sales of several hundred million dollars two years later. Unfortunately for Cisco, the success bred by its acquisitions carries with it the seeds of self-destruction.
Acquisitions come harder and higher.
Takeover artists used to look for companies with shares trading far below the value of total assets. Today's takeover artists at Cisco and other such companies can't do that. They aren't buying assets, they aren't buying products. They aren't buying profits and they aren't even buying revenues. They're buying people and the half-formed technology they may someday turn into products.