SAN JOSE, Calif. and ORRVILLE, Oh. -- Cisco Systems®, the leading supplier of networking equipment, and Crisco® Oils and Shortenings, a spin-off from The J.M. Smucker Company, announced today the world's first merger between a fat-based food-products company and silicon-and-glass-fiber-based information technology hardware firm.
John Chambers, uber-techie and Cisco CEO, is enthusiastic about the up side on the tech side. "Together we will produce the slickest hardware geekdom has ever seen," he said.
Experts from the food and food preparation industry, however, are skeptical about the touted "synergy" of the deal. "Different products, different markets, different supply chains -- I don't see how this helps either of them," said Barry Halzer, NPD food industry analyst.
"Although high-fiber products have been hot in food consumables for a while, I personally am not sure how customers will respond to glass-fiber foods," said Bailey Barnes, a food-industry analyst at Morgan Stanley. "The food consumer is generally conservative, and people are really used to cellulose-fiber-based products. Maybe, just maybe, the techies will go for something this cutting-edge, and, historically, they have consumed a lot of partially hydrogenated-fat and lard-based foods," said Barnes.
Tech industry analysts were more positive in their outlook. "Cisco will provide the heft, the bulk if you will, needed to produce regular favorable earnings reports, while Crisco will grease the internal systems of both companies increasing higher product movement," said JupiterResearch analyst Dominick Dole.
Some industry observers do think that the technical expertise that Crisco brought to bear to produce Simple Touch Sprays could help Cisco on some of its stickier human-machine interface problems. According to the former marketing director at Proctor and Gamble, Terence Koritz, the Simple Touch Spray features an innovative "Click & Go" nozzle for its pan-coating oil products that eliminates the lid and allows for one-hand operation -- and generally leaves no sticky mess to clean up later.
"Similar solutions for Cisco router box interfaces could definitely help increase market share," said Joellene Wilcox, a Loehmann Brothers technical analyst.
One tech industry insider said he thinks such speculation is baseless. He said he's seen a cross-industry hybrid technology like this before. "I remember back in 1999 when Novartis tried to implement Lin-Lax X, their Ex-Lax enhanced Linux boxes, to increase throughput on backbone routing. All they ever produced was a bunch of crap," said Uttam Kumar, a design engineer with Bharati-AirTel.
Wall Street appears to be holding tight, adopting a wait and see attitude on the merger announcement with the new combined Cisco Slick Systems remaining steady to close at 19.93 per share, just under its average for the year.
Copyright 2006, Douglas Salguod