When the Internet was just blossoming, it was simply enough to get your info from your computer out into the world beyond. And that is what CSCO was great at. But now with the audience fully matured and demanding video (e.g. WEBX), the companies that speed up the last mile of transmission of web content will become increasingly valuable. AKAM is the leader in this. They take content (for instance, your website), take it off of your local hosting service and distribute it across the world so that whoever wants your content will have as few hops as possible before finding it. At 15x cash flows trades in line with where WEBX is trading at CSCO's acquisition price.

JCOM is also an interesting play here. JCOM provides internet faxing (they used to be called JFax), conference calling, and other CRM services. A combination WEBX/JCOM would be a true unified communications platform for the enterprise. Similar to AKAM above, and WEBX, JCOM trades at 15 times cash flows. They have $156mm cash in the bank with no debt so the balance sheet is pristine. Last year they had EBITDA of$78mm and 21% revenue growth. This year, analysts are estimating revenues to grow from $181mm to $222mm. Substantial growth for a company that is trading at only a slightly above average P/E compared to the market-at-large.

Brocade is in the front line in providing sophisticated storage solutions into the corporation. They provide the software, the switches, the bandwidth,the hardware know how to build clusters, mirroring, backups, etc. CSCO has been building out its storage with its latest acquisition of neopath but I think a buy of BRCD would make it game over. BRCD trades at 17 times cash flows but they will probably double those cash flows over the next year,making an acquisition quickly accretive. Analysts expect revenues to grow from 1.3bb this year to $1.6bb next.

Avaya is a direct competitor with CSCO in the entprise. CSCO can buy them, scoop up their customers, and the acquisition will be immediately accretive. AV trades at just 6x cash flows, in part, because CSCO cominates them across the industry. With $900mm cash in the bank, $650mm in cash flows, and only a $4bb enterprise value this is just chump change for CSCO and cheap.

If CSCO is routing the data around, storing it, etc then it makes sense they will want to secure it. MFE provides solutions for both companies and consumers to build firewalls, seek out and destroy intrusions, protect against viruses, etc. With $1.2bb cash in the bank, $300mm in ebitda, and an enterprise value of $3.45bb, this acquisition would be immediately accretive to CSCO.

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