Cisco, Dell unlikely to bid says analyst

By @ibtimes on

Cisco System and Dell are unlikely to bid on Sun, nor are other possible suitors, analysts are predicting, following the reported breakdown of talks with Sun and IBM.

“Others have already passed over Sun -- given that, we’re unsure who would step up to the plate,” said Bill Kreher, an analyst at Edward Jones & Co. “We are unsure if the company can execute a successful turnaround on its own. Their future is very uncertain.”

However, Cisco reported that it will be ‘active’ with acquisitions despite the economic downturn, as shares took a hit after a downgrade yesterday from Goldman.

“We will be active -- not hope to be -- will be,” Ned Hooper, Cisco’s senior vice president of corporate business development, said in an interview. “We continue to use M&A as a key part of our growth strategy. The downturn for us is a big positive.”

RBC Capital Markets analyst Mark Sue said Sun wouldn’t fit well with Cisco. “What Cisco doesn’t do well and is less inclined to do is fix neglected companies,” Sue said. “It’s unlikely Cisco will have the stomach to take on such an undertaking.”

Meanwhile, struggling Dell sees opportunity On IBM’s Sun move as talks broke down after Sun rejected an offer of about $9.40, a share price it regarded as too low from the original $10 a share.

It may find an acquisition of Sun too expensive and the combination process too complex, said Toni Sacconaghi, an analyst with Sanford C. Bernstein & Co.

Bidding for Sun also may not make sense for Hewlett-Packard because the company is digesting the $13.9 billion acquisition of Electronic Data Systems, said Michael Shinnick of Wasatch Advisors Inc.

Along with the companies, IBM, Hewlett-Packard are also competing for a waning pool of business as customers cut cost to save in the current economic downturn.

Cisco shares down 79 cent to 4.51% at 16.74, along with Dell Shares fell 48 cents to 4.65% at $9.85 in Tuesday early trading.

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