Sadly, Cisco is out of control and should never have purchased the company at the heart of the MinoHD video camcorder (I have one of these products – they're great). Here's the Brockmann angle on this deal:
Strategic Fit [0/5].
This is one of Cisco's first consumer electronics offerings other than the Scientific Atlanta deal and some LinkSys (now Cisco-branded) offerings. Consumer electronics are a market segment fraught with risks that Cisco knows nothing about. Risks of rapid obsolescence. Risk of fickle customers. Risk of inventory buildup for products consumers don't end up buying. Risks of retailer credits. Risks of fads – hit products without repeats.
Wanting to compete is a lot different than being able to successfully compete.
Timing [0/5].
In a recession many companies can be had for a pittance, but to pay $590 million in stock is way way way too much. Recessions should be used to build up your strength against your competition, not to distract the management team. I suppose John Chambers thinks he's a west coast Jack Welch, capable of turning anything to gold?
Customer Demand [0/5].
I don't get this at all. No Cisco channel or customer will find value in this deal. Is this technology how Cisco plans to bring Telepresence to the home? Yikes!
Potential [1/5].
Don't get me wrong, I love the product, but Cisco has no business owning it. Brockmann & Company is most disappointed in this deal, yet because it's a great product it will attract competition, who will use the same standard components to create the same, but better product. Frankly, putting the money in a bank is a better return than this project. John Chambers has been lulled into thinking this will drive the Cisco brand into the home. Maybe, but only after spending millions on new products, millions on new advertising, and millions for the founders. It could also burn the brand like the xBox has been doing for the Microsoft brand – driving it home, but only without profits and only with huge subsidies from Microsoft's more cash-bearing businesses.
As a shareholder, I could easily do without this deal.
Stop the nonsense John and get back to basics!
