One of the things that we're going to see in '09 is these big companies, EMC, HP, Oracle, the large telcos, they're going to flex their muscles and buy aggressively and I don't just mean dozens of deals. I mean they will be aggressive on value and going after the best companies that don't have another alternative and that might otherwise have done an IPO. So they're going to seek to strengthen their already strong position ...put distance between them and their nearest competitors.
Would you include Cisco in that group?
Yes. There's a lot of rationalization going on at Cisco, particularly around video. They are so dominant in the enterprise now it is hard to think of what else they need to do. In video, there are two things that caused them not to move as aggressively this year as they otherwise would have. They're still sorting through their strategy around the Scientific-Atlanta acquisition and how they're going to organize and manage themselves to capitalize on that market. No. 2, the videoconference modernization process hasn't matured as some people thought it would.
Going back to 2008, what deals surprised you, had you scratching your head or didn't happen that you thought might?
The big deal everyone was talking about of course was Microsoft-Yahoo and whether it should or shouldn't happen. As an M&A professional I don't want that deal to happen because I want more buyers in the marketplace. If you're a venture capitalist, if you're building next-generation technology companies you don't want to see consolidation among your big players like Microsoft and Yahoo. The second angle is if you're a Microsoft shareholder, and I think this angle was relatively underreported, I'm not sure why you want that deal to happen. If I'm a public shareholder I can go buy Yahoo stock. I have to believe that Microsoft and Yahoo together are better than Yahoo alone and I personally don't think Microsoft made a very compelling case as to why that was true.
Another deal that didn't happen is Facebook. It seems very inclined to focus on building itself as a significant, powerful and independent company. I'm delighted they were not acquired by one of the obvious players. It takes a lot of courage to turn down that much money.
