Cisco Raising Money, Maybe After Something Big

Cisco has clearly been on an acquisition tear. Now an offer of unsecured notes to raise a total of $5 billion raises the question of what company it’s after now.

Of these notes, $500 million will mature in November 2014 and will bear interest at an annual rate of 2.90%, $2.5 billion will mature in January 2020 and will bear interest at an annual rate of 4.45%, and $2 billion will mature in January 2040 and will bear interest at an annual rate of 5.50%. The 2.90% notes due November 2014, the 4.45% notes due January 2020, and the 5.50% notes due January 2040 were priced to yield 2.955%, 4.469% and 5.679%, respectively.

According to the Cisco release, the money is for “general corporate purposes.” Of course. It’s probably low on paperclips. What makes this strange is the size of the company’s bank account. In its fiscal year 2010 Q1 earnings report (period ending October 24, 2009), Cisco had cash and cash equivalents of $4.774 billion, from $5.718 billion the previous quarter. Throw in investments, and that’s $35.4 billion. But investments don’t necessarily turn into cash that easily, which makes it sound as though Cisco wants some fast spending money. And that sounds like some kind of acquisition — either one large one or several smaller.

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