Cisco 2012 Annual Report Download - page 19

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Acquisitions, Investments, and Alliances
The markets in which we compete require a wide variety of technologies, products, and capabilities. The
combination of technological complexity and rapid change within our markets makes it difficult for a single
company to develop all of the technological solutions that it desires to offer within its family of products and
services. We work to broaden the range of products and services we deliver to customers in target markets
through acquisitions, investments, and alliances. We employ the following strategies to address the need for new
or enhanced networking and communications products and services:
• Developing new technologies and products internally
• Acquiring all or parts of other companies
• Entering into joint-development efforts with other companies
• Reselling other companies’ products
Acquisitions
We have acquired many companies, and we expect to make future acquisitions. Mergers and acquisitions of
high-technology companies are inherently risky, especially if the acquired company has yet to ship a product. No
assurance can be given that our previous or future acquisitions will be successful or will not materially adversely
affect our financial condition or operating results. Prior acquisitions have resulted in a wide range of outcomes,
from successful introduction of new products and technologies to an inability to do so. The risks associated with
acquisitions are more fully discussed in “Item 1A. Risk Factors,” including the risk factor entitled “We have
made and expect to continue to make acquisitions that could disrupt our operations and harm our operating
results.”
Investments in Privately Held Companies
We make investments in privately held companies that develop technology or provide services that are
complementary to our products or that provide strategic value. The risks associated with these investments are
more fully discussed in “Item 1A. Risk Factors,” including the risk factor entitled “We are exposed to
fluctuations in the market values of our portfolio investments and in interest rates; impairment of our investments
could harm our earnings.”
Strategic Alliances
We pursue strategic alliances with other companies in areas where collaboration can produce industry
advancement and acceleration of new markets. The objectives and goals of a strategic alliance can include one or
more of the following: technology exchange, product development, joint sales and marketing, or new-market
creation. Currently, we have strategic alliances with the following companies or subsidiaries thereof:
Accenture Ltd; AT&T Inc.; Cap Gemini S.A.; Citrix Systems, Inc.; EMC Corporation; Fujitsu Limited; Intel
Corporation; International Business Machines Corporation; Italtel SpA; Johnson Controls Inc.; Microsoft
Corporation; NetApp, Inc.; Nokia Corporation; Nokia Siemens Networks; Oracle Corporation; SAP AG; Sprint
Nextel Corporation; Tata Consultancy Services Ltd.; VCE Company, LLC; VMware, Inc.; Wipro Limited; Xerox
Corporation; and others.
Companies with which we have strategic alliances in some areas may be competitors in other areas, and in our
view this trend may increase. The risks associated with our strategic alliances are more fully discussed in “Item
1A. Risk Factors,” including the risk factor entitled “If we do not successfully manage our strategic alliances, we
may not realize the expected benefits from such alliances, and we may experience increased competition or
delays in product development.”
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