Cisco Systems Case Study

Referencing Assignment

LIHUA GAO

California State University, Northridge

In 2014, Cisco Systems, Inc. 2013 annual report showed that Cisco invested  $ 135 million in Insieme Networks, Inc. in 2012. According to the Cisco’s Consolidated Financial Statements in 2013, Cisco acquired approximately 84% of Insieme’s shares. Therefore, Cisco had a right to purchase the rest of noncontrolling interest. If so, the milestone payments will occurrence in the first half of fiscal 2014. In addition, Cisco System report (2014) also expressed “The milestone payments will then be recorded as compensation expense by us based on an estimate of the fair value of the amounts probable of being earned, pursuant to a vesting schedule”. In connection with this estimate, the maximum amount of compensation expense might be $863 million and would be paid in fiscal 2016 and fiscal 2017.

Made an investment in Insieme is the initial purpose of Cisco; however, the intention and performance was changed when the company owned considerable shares of Insieme.

Reference

Cisco Systems, Inc. (2013). Cisco Systems, Inc. 2013 Annual Report. Retrieved from: http://www.cisco.com/web/about/ac49/ac20/ac19/ar2013/docs/2013_Annual_Report.pdf

I have read and understood the CSUN policy on academic dishonesty, printed in the schedule of classes and in this syllabus. I verify that all of the work I submit in the program will be my own (in the case of individual assignments) or of my group (in the case of group assignments) and that all references to other sources will be properly cited. I understand that this assignment will become part of my student file here in the College.

Taken from Cisco Systems, Inc. 2013 Annual Report, pages 66-67, downloaded Jan. 14, 2014 from http://www.cisco.com/web/about/ac49/ac20/ac19/ar2013/docs/2013_Annual_Report.pdf

p. 66

Insieme Networks, Inc. In the third quarter of fiscal 2012, we made an investment in Insieme, an early stage company focused on research and development in the data center market. As set forth in the agreement between Cisco and Insieme, this investment includes $100 million of funding and a license to certain of our technology. In addition, pursuant to a November 2012 amendment to the agreement between Cisco and Insieme, we agreed to invest an additional $35 million in Insieme upon the satisfaction of certain conditions. As of July 27, 2013, we owned approximately 84% of Insieme as a result of these investments and have consolidated the results of Insieme in our Consolidated Financial Statements.