“We will be active — not hope to be — will be,” Hooper, Ciscos senior vice president of corporate business development, said in an interview. “We continue to use M&A as a key part of our growth strategy. The downturn for us is a big positive.”

Few Silicon Valley companies have made more acquisitions than Cisco, the worlds largest maker of networking equipment. The company has bought about 130 businesses in its 25-year history, using them to enter new markets, such as cable set-top boxes and wireless routers for the home. Cisco bought 11 firms in 2007 and five in 2008.

“The pace has slowed a bit as we make sure we do the right deals,” Hooper said. “We expect to be active over the next 12 months.”

Chief Executive Officer John Chambers said in February that he plans to use Ciscos $29.5 billion in cash to make purchases. Last month, Cisco bought Pure Digital Technologies Inc., the maker of the Flip Video camcorder, for $590 million in stock.

“Bigger companies are saying these are times you gain market share and consolidate your position,” said Sarah Friar, an analyst at Goldman Sachs Group Inc. in San Francisco. “Its the perfect time to sidestep competitors that dont have the size to make these moves.”

Go Slow

International Business Machines Corp., the worlds largest computer-services company, was in discussions last week to buy Sun Microsystems Inc. for $9 to $10 a share. The talks fell apart over the weekend because Sun officials said the price was too low, a person familiar with the matter said.

Cisco and IBM could be exceptions. The boards of most companies are telling their merger-and-acquisition teams to go slow, said Pete Bodine, managing director of Allegis Capital, a Palo Alto, California-based venture-capital firm. Suitors are waiting for prices to drop further, while some acquisition targets are holding out for the kind of prices they used to command.

“Theres no force compelling anyone to get into the checkout line,” Bodine said. “Everyone is just pushing the empty cart up and down the aisle.”

Acquisitions of technology companies in the U.S. fell 82 percent to $2.2 billion in the first quarter of 2009 from a year ago, according to data compiled by Bloomberg. The number of purchases announced fell to 206 from 337.

BMC, NetApp

That focus may make BMC Software Inc., a Houston-based enterprise-software maker, an acquisition target for Cisco, UBS AG analysts wrote in a March 23 note. NetApp Inc., a maker storage computers, may also be a takeover candidate, UBS said.

Kristin Carvell, a Cisco spokeswoman, said the company doesnt comment on rumor or speculation about acquisitions or investments. BMC Software also doesnt comment on rumor or speculation, said Mark Stouse, a spokesman. NetApp CEO Daniel Warmenhoven said in an interview last month that he wants NetApp to remain a stand-alone company.

Wait and See

Cisco rose 2 cents to $18.16 on April 3 in Nasdaq Stock Market trading. The shares have gained 11 percent this year.

Oracle, the worlds second-largest software company, has spent more than $34.5 billion in a buying spree that began in 2005. Chief Executive Officer Larry Ellison told analysts in December that hes taking a wait-and-see approach to acquisitions. The company could make a large purchase if the price is right, he said.

Oracle had $11.3 billion of cash and marketable securities at the end of February. Karen Tillman, an Oracle spokeswoman, didnt respond to a request for comment.

For now, some buyers and sellers are at an impasse thats likely to last until the second half of the year, said John DiFucci, an analyst with JP Morgan Securities Inc. in New York.

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