Cisco pays $3b to buy videophone company
NEW YORK - Cisco Systems Inc. tapped its immense cash hoard and announced a deal yesterday to buy Norway’s Tandberg ASA for $3 billion in a bid to dominate the global market for videoconferencing equipment.
Cisco is paying twice the value of the entire global annual market for videoconferencing equipment, at about $1.5 billion a year. But the fact that Tandberg is a Norwegian company allows Cisco to use an asset that’s otherwise not very useful: cash piling up in its overseas subsidiaries.
Cisco, the world’s largest maker of computer networking equipment, had a cash balance of more than $35 billion at the end of July, most of that overseas. By buying an international company, Cisco is avoiding the US taxes it would have to pay to bring the money home. The deal is Cisco’s first acquisition of an overseas public company, chief executive John Chambers said.
With Tandberg, Cisco gets the leading maker of systems ranging from small “videophones’’ to full conference-room setups. It has taken the lead thanks to smart marketing and a strong product lineup, according to Wainhouse analyst Ira Weinstein.
“It’s hard to say anything negative about Tandberg,’’ Weinstein said. “This company knows how to do this.’’
Cisco’s most recent major acquisition was also video-oriented: It bought Pure Digital Technologies Inc., maker of the popular Flip camcorders, for $590 million.
Sales of videoconferencing equipment have held up relatively well as companies have looked for ways to save travel dollars.
