Big tech goes bargain hunting, page 2
Even facing that pain, there is no lack of sellers, says Ned Hooper, Cisco's head dealmaker. Hooper led Cisco's purchases of WebEx (online conferencing service) and IronPort (security software). And Cisco, which has a Valley-leading $26.2 billion in cash, is in the market for more.
Before 10 o'clock one recent morning, Hooper already had three eager bankers dial him up. He says recent calls tend to start the same way: "Hey, Ned it's been a while. I've got a great idea I want to run by you." Then they talk about Cisco buying their company. "If it's not nailed down, it's for sale," Hooper says. "It hasn't been like this since 2001."
Cisco has always been a buyer, in good times and bad, but it likes picking up companies during downturns, after they've had to learn some financial discipline. Hooper says that any purchase Cisco makes will have to be strategic (translation: add revenue). That, more than price, will determine Cisco's level of interest. "If you are three months from raising a round of financing and it's clear that is why you are selling, don't come to us," Hooper says. "We are not the buyer of last resort."
What's clear is that after several years of paying up for tech companies - of being forced into bidding wars with massive private equity shops and hedge funds dabbling in venture capital - the Valley's big tech leaders are glad to be back in demand and in control of the deals.
Case in point: Dan Warmenhoven, CEO of data-storage company Network Appliance. Over lunch in San Francisco recently, Warmenhoven clearly enjoys his fish and chips about as much as he relishes his new position of strength. NetApp may not have the massive coffers of Cisco, but Warmenhoven has $2.1 billion in cash at the ready.
He says he wouldn't mind picking up "something that adds to our toolkit." Like what? "Technology that would have cost me $100 million a year ago but might go for $11 million today. Deals like that." He checks a burst of incoming messages on his BlackBerry and says with a grin, "Look, the offers are coming in right now."