Business, Economics and Jobs

Cisco purchases another foreign company


John T. Chambers, Chairman and Chief Executive Officer of Cisco, gestures on Jan. 25, 2012 during the 'The Global Business Context' meeting as part of the World Economic Forum (WEF) at the Swiss resort of Davos.


Vincenzo Pinto

Cisco today announced it has acquired SolveDirect for an undisclosed sum.

SolveDirect makes technology that helps enterprises connect to multiple clouds and share data among them. This is a good move for Cisco's portfolio as it tries to remake itself into a bigger enterprise player, beyond selling networking equipment.

But the buy is interesting for another reason. SolveDirect is based in Vienna, Austria. This marks Cisco's third acquisition in 2013 — none of them of US companies.

Last month, Cisco CEO John Chambers said that he was no longer willing to use the company's $46 billion in cash to acquire US companies until the US changes its tax code.

That's because 80 percent of that cash is parked overseas, where most of it was also earned. If Cisco brings it back to spend it in the US, the company will have to fork over 35 percent in taxes. Chambers has been trying to get the US to lower that tax rate for years.

The Senate's Republican Policy Committee has argued that the US approach to taxing overseas earnings disadvantages US companies, because most countries take a "territorial" approach to taxing income, taxing it based on where it's earned.

Cisco has historically been a company that acquires like crazy, particularly in the US.  For instance, in 2012, Cisco bought 11 companies, nine of them in the US and two overseas. But one of those overseas companies was a big purchase—the UK-based NDS Group for $5 billion.

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