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Cisco (CSCO) Fans M&A Flames, Buys Starent (STAR) For Premium
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Cisco Systems, Inc. (NASDAQ:CSCO) was certainly anxious to buy Starent Networks (NASDAQ:STAR). It paid $35 a share for the supplier of IP-based mobile infrastructure solutions. Starent closed at $29 yesterday.
Cisco expects the acquisition to be dilutive to non-GAAP earnings in fiscal years 2010 and 2011 and accretive to non-GAAP earnings in fiscal year 2012.
The move may be strategically intelligent because it gets Cisco further into the smartphone wireless infrastructure business. But, the deal is expensive. Starent only made $15 million on $62 million in revenue last quarter.
We recently noted how all of the tech titans were holding some $260 billion in cash that could be deployed for mergers. This would hardly put a dent in that figure.
Douglas A. McIntyre
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