ということも興味深い。
Cisco's Run of Spending
Cisco, the computer networking giant, has spent the last decade acquiring rivals and buying back stock. It's time to acknowledge that this strategy isn't working. Investors who bought Cisco's shares a decade ago have received no return on their investment. 
Cisco, led by John Chambers, will post its results this week.
Results this week should give Cisco another chance to profess its optimism. Technology markets are rebounding. And John Chambers, Cisco's chief executive, will talk about the 26 new product areas that he thinks can each generate $1 billion in sales in the near term.
Eternal ebullience is nothing new from Mr. Chambers, who once claimed Cisco could increase sales by 50 percent a year over the long run. They've since grown 7 percent annually.
Yet the years of deal making may be making Cisco unwieldy. Cisco has 59 standing boards and councils. This seems like a recipe for endless meetings, management confusion and reduced accountability.
The company says it's a way to involve more people in decision-making. In any case, Cisco continues to acquire new businesses — $22 billion worth since 2002 (including some $7 billion this year), according to Dealogic.
Cisco has always acquired and plugged companies into its sales and production network. These firms either strengthened Cisco's core business, selling routing and switching systems, or helped increase demand for its products.
There was another positive side effect of this: optimistic investors valued Cisco on earnings several years in the future. So Cisco could buy small companies at lower valuations with its supercharged stock and reap the benefit as investors then rerated the acquired earnings at Cisco's higher multiple.
As the trajectories of the shares of other former acquisition machines like Tyco International and General Electric show, this strategy can stumble when companies reach a certain size. The purchaser needs more or bigger deals to show impressive growth. Cisco is indeed chasing larger ones; it recently agreed to buy Starent Networks and Tandberg for about $3 billion each.
Still, Cisco may walk away from Tandberg because minority investors want more money. That suggests the company is keeping some fiscal discipline. But if Cisco follows the acquisition machine model, the difficulty in running the company smoothly while mounting ever-larger deals will become increasingly evident.
Investors may become cautious, and reduce the value they attach to the acquisition machine's stock. When that happens, deals done using stock become unattractive and investors often begin clamoring for a breakup, rather than more acquisitions.
The other pillar of Cisco's strategy, stock repurchases, hasn't rewarded shareholders either. Returning excess cash from operations to shareholders should increase a stock price. Unfortunately, in Cisco's case, the practice hasn't measured up to theory. Cisco has spent close to $60 billion on stock buybacks since the start of its 2002 fiscal year. That's about three-quarters of cash flow from operations. So why haven't shareholders benefited?
First, the total count of shares outstanding has only decreased by 1.3 billion. This is partly because of dilutive acquisitions. However, if the number of shares hasn't shrunk much and Cisco's stock hasn't risen, this presents a conundrum. What exactly is the benefit to shareholders of these purchases? Shouldn't the price of a slice of Cisco increase if it is spending so much on buybacks?
One might argue that's because Cisco's stock is undervalued. A less appealing alternative is that Cisco is in the habit of overpaying to win control of companies it covets. In this case, the benefits accrue to the seller.
Part of the blame, however, lies in Cisco's generous use of options as compensation. Mr. Chambers was one of the loudest voices in Silicon Valley against forcing companies to show the cost of these grants. When Cisco spends cash to mop up the resulting shares, management gets the benefit over shareholders.
After 10 years of searching for the promised land of growth, it's time for something different. Slowing acquisitions would a good start. If the strategy's benefit isn't apparent after a decade of purchases, it is hard to see how it will appear magically now.
Moreover, if Cisco is so complex that it requires 59 councils, it should consider breaking into more manageable pieces. Lastly, since buybacks haven't rewarded shareholders, the company should switch to a dividend. Mr. Chambers has promised shareholders one before he retires. Adding one soon would be a great way to show that his baby has matured.
