Cisco made a bid for the purchase of Cerent, an optical networking company. At the time of the case, in August 1999, Cerent recently filed for an initial public offering. Several other optical networking companies with little operating history and no earnings, but a very "bright" futures, recently adopted by the public markets by storm with the IPO, and the subsequent stock performance that exceeds all previous expectations. Four months before, Cerent rejected a takeover offer from Cisco. However, now Cisco has been close to 20 times compared to the previous rate. Carl Russo, CEO Cerent, must decide whether to accept the offer and become part of Cisco, or continue with the company's plans to go public. "Hide
by John P. Morgridge, Kate Sigg Source: Stanford Graduate School of Business 14 pages. Publication Date: April 1, 2000. Prod. #: E83-PDF-ENG
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