Art and science of M&A

Cisco recently did a podcast interview with Dan Scheinman, Cisco SVP of corporate development and management professor Saikat Chaudhuri (from Wharton... but don't hold that against him!)

It's a great 16 min conversation about the art and science of M&A, the importance of integrating an acquired company, and the importance of timing when making a deal.

Dan has overseen over 30 Cisco acquisitions including Airespace ($450M), Linksys ($500M) and Scientific Atlanta ($7B).

Cisco Podcasts

Cisco SVP Dan Scheinman and Wharton's Saikat Chaudhuri Discuss Acquisitions and Innovation, Part I: An Innovation 'Ecosystem'

In the first of a four-part interview, Cisco SVP Dan Scheinman talks with Wharton management professor Saikat Chaudhuri about the key drivers of acquisitions at Cisco and the critical role customers play in innovation.

Quick econ thoughts

Based on the brief snapshot in Reuters here are some quick thoughts....

Core prices are down so the Fed may be thinking interest rates are at the sweet spot. With inflation perhaps in check there may not be any sense in raising them to further slow the economy.

Could Home Depot's disappointing results signal a further slowing in the housing market? That seems a little too basic an analysis to me. But either way, it could be something worth watching and could perhaps mean that there won't be much more happening in the economy from the Fed or the government for fear of tipping this delicate inflation vs. slow economy balance.

There goes one excuse for deficits....

Latest economy figures show that productivity was flat last quarter and per unit labor costs went up. This is renewing concerns that inflation is on the way.

Here’s my take on it based on the little I know: Per unit labor costs are going up, which means labor is consuming more capital to do its work. We get this capital from abroad as foreigners find new and interesting ways to invest in the US.

That is all fine and dandy so long as we can find interesting ways to use their capital; put another way, an argument can be made for trade deficits if we use the capital coming in to up our growth rate, which is intrinsically tied to our growth in productivity.

Productivity doesn’t grow, the US economy doesn’t grow, and those deficits look more and more worrying.


U.S. Productivity Idles As Wage Pressures Rise - WSJ.com

What happens to Africa with Chinese cash?

Certainly in a part of the world as wracked by poverty as Africa, it is hard to not to be happy when anyone comes in with loads of cash for local investment.

Loads of cash seems to be what China is dropping on the continent in exchange for natural resources. Hopefully, that investment is putting local people to work on ground there but the Economist here asks the right questions, what else is Africa getting? Know-how? Greater transparency and efficiency?

These questions shouldn't, of course, be restricted to Chinese investments happening in Africa, but all foreign investment there.

If Africa really wants to benefit from this trade, individual African countries should band together to up their negotiating power and extract more for their people and their individual countries than piles of money (which undoubtedly will be misspent in several quarters.)

When I was in South Africa on vacation a while back, there was a lot of debate on TV about the benefits of doing more business with the Chinese (and again, this discussion should be extended to all powers, the US, EU, etc.) If Africa is just selling away its resources and getting little else in return, then this sort of trade will provide little more than a few poorly-paid local jobs.

I'm not advocating any sort of protectionism here, open trade between Africa and China could be a good thing. I guess what I'm saying is that Africa should negotiate for more broad investment in their countries, perhaps to beef up local infrastructure such as roads and energy transmission. There should also be some sort of real oversight with teeth to ensure that any foreign money coming into individual countries is well spent.


Africa and China | Wrong model, right continent | Economist.com