Is Cisco Trying to Rain on Microsoft's Parade?
It looks like Cisco Systems (NAS: CSCO) is taking the saying "better late than never" a little too literally.
Redmond software giant Microsoft (NAS: MSFT) made waves in May last year, when it announced its biggest acquisition ever: the $8.5 billion acquisition of video chatter Skype. I'm still scratching my head over why Mr. Softy wanted eBay's (NAS: EBAY) sloppy seconds in the first place, since the online auctioneer took a massive $1.4 billion charge on the trade, but that's neither here nor there.
After six months of jumping through regulatory hoops, including receiving unconditional approval from the European Commission, Microsoft and Skype sealed the deal in October. Fast-forward nearly another six months, and Cisco is now appealing the EC's stamp of approval on the marriage. I guess the networking giant missed the whole "speak now or forever hold your peace" bit.
To be clear, Cisco isn't looking to nullify the union altogether; rather, it now wants the regulator to add in some standards-based interoperability conditions on Microsoft. It's like saying, "Go ahead and get hitched; I just don't want you to honeymoon in Hawaii, Tahiti, France, Italy, Bora Bora, Las Vegas, the Bahamas, or Mexico, but I hear that North Dakota is nice this time of year."
As a major player in video conferencing, Cisco is bent out of shape because Microsoft's Lync software and Skype both use proprietary technologies, and Cisco wasn't able to land a deal with Mr. Softy to ensure that its own apparatuses would be compatible.
The company is trying to maintain its grip on the enterprise-videoconferencing market, particularly after rightly axing its misguided and overpriced Umi system that was supposedly geared toward consumers. Anyone could have told Cisco that consumers wouldn't be keen on the idea of forking over $600 upfront and $10 per month when Skype is available for the low-low cost of $0.
Microsoft's official response was that the European Commission already conducted its "thorough investigation," and "Cisco actively participated," so it's pretty sure that there won't be any reneging.
Sorry, Cisco, but you had your chance to object; now you have to forever hold your peace.
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At the time this article was published Fool contributorEvan Niuholds no position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Cisco Systems and Microsoft.Motley Fool newsletter serviceshave recommended buying shares of Microsoft, eBay, and Cisco Systems, writing puts in eBay, and creating a bull call spread position in Microsoft. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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