Subject category:
Entrepreneurship
Published by:
Stanford Business School
Version: April 2000
Length: 14 pages
Data source: Field research
Abstract
The case examines the issues surrounding an acquisition bid by Cisco for Cerent, an optical networking company. At the time of the case, in August 1999, Cerent had recently filed for an initial public offering. Several other optical networking companies with little operating history and no profits, but very 'bright' futures, had recently taken the public markets by storm with IPO's and subsequent stock performance that was exceeding all previous expectations. Four months prior, Cerent had rejected an acquisition offer by Cisco. However, now Cisco was offering close to 20 times its previous bid. Carl Russo, the CEO of Cerent, has to decide whether to accept the offer and become a part of Cisco or continue with the company's plans to go public.
About
Abstract
The case examines the issues surrounding an acquisition bid by Cisco for Cerent, an optical networking company. At the time of the case, in August 1999, Cerent had recently filed for an initial public offering. Several other optical networking companies with little operating history and no profits, but very 'bright' futures, had recently taken the public markets by storm with IPO's and subsequent stock performance that was exceeding all previous expectations. Four months prior, Cerent had rejected an acquisition offer by Cisco. However, now Cisco was offering close to 20 times its previous bid. Carl Russo, the CEO of Cerent, has to decide whether to accept the offer and become a part of Cisco or continue with the company's plans to go public.