Cisco's Connections

Most of the time, it doesn't come to that. As Cisco has made a name for itself in acquisitions, engineers and entrepreneurs at small tech start-ups in Silicon Valley, Boston, and Research Triangle Park, N.C.--or, increasingly, in Tel Aviv, where Cisco has made nine acquisitions in recent years--are happy to be acquired. There is a clear career path, after all, for employees at Cisco who join the company this way. The senior vice presidents of switching, operations, and security all came from acquisitions. Hooper himself, the point person on M&A transactions, is proof positive that working for Cisco does not mean being put out to pasture. "With Cisco, the acquisition is not the end but the beginning," he says. "The people we're acquiring have to feel the same way: It's the beginning of the next generation of that company."

While questions remain about how Cisco's stagnant stock price will affect its ability to entice acquired workers with stock options, the company shows no signs of remaking its A&D strategy. Cisco will invest as much as $1.1 billion in India over the next three years, and it is only a matter of time before it makes its first acquisition in China, a potentially huge growth market. "We keep trying to find a perfect way to do this," say Scheinman. While they're at it, Cisco is certain to keep acquiring and keep growing. It's just a matter of when--and how much.

KEY ACQUISITIONS

1993 Crescendo Communications, $95 million: an entry into switches

1999 Monterey Networks, $517 million: a fiber-optics deal that fizzled

2003 Linksys, $550 million: a move into home networking

2005 Airespace, $450 million: a beachhead in wireless technology

2006 Scientific Atlanta, $7 billion: an attempt to pave the way for digital TV over the Internet