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Why Did Cisco Kill Its "Poison Pill?"

Last week, Cisco cancelled a "poison pill" anti-takeover plan three years earlier than planned for reasons that seem murky at best. Company spokespeople said that the plan wasn't killed as part of preparations to sell the company, and instead claimed the move was done to strengthen its corporate governance practices.

Strengthen its corporate governance practices? Do you have a clue what that means? If you don't, you're not alone. No one else seems to understand why Cisco would kill an anti-takeover plan at a point when no takeover seems imminent -- and when there certainly has been no hue and cry to change "corporate governance practices."

So what's going on here? Is the real truth that Cisco has plans to sell, and have its stockholders cash in?

I don't think so -- at the moment, there are no potential buyers on the horizon, and Cisco is doing well enough, and with a bright enough future, that there's certainly no need for the company to seek suitors.

So why kill the poison pill, and why do it now? There may be some truth in the "corporate governance" argument. But beyond that, I think that Cisco is looking several years down the road as well. The much-hyped "convergence" between TV, telephone, and the Internet is finally arriving and Cisco, as much as anyone, stands to benefit. The next few years should be fat ones.

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