Networking equipment maker,
Cisco Systems Inc.
), recently completed the acquisition of cyber security firm,
), for $2.7 billion. The company paid $76 per share in cash for
Columbia, Maryland-based Sourcefire was founded by Martin
Roesch in 2001. It develops hardware and software for network
security, including next-generation firewalls, intrusion
prevention systems and advanced malware protection products.
A large number of its products are based on Snort, an
open-source intrusion detection system (IDS). Sourcefire's
solutions have hit the 4 million downloads mark to date (company
The acquisition will help Cisco to strengthen its position in
the network security market. The company is particularly strong
in the government vertical and the acquisition will enable it to
attract more corporate customers. The acquisition will also allow
Cisco to develop and offer end-to-end security platforms in the
The acquisition comes at a time when the Internet security
market is evolving rapidly and Cisco is aligning its long-term
growth strategy around the "Internet of Everything" concept.
Other IT bellwethers such as
(EMC) are also focusing on acquisitions in order to boost core
Cisco Systems is the leading provider of IP-based networking
services and other products. As part of its acquisition strategy,
Cisco bought 11 companies in 2012. In Jan 2013, Cisco spent $475
million to purchase Intucell, a company that develops advanced
self-optimizing network (SON) software to enable mobile carriers
to plan, configure, manage and optimize cellular networks
Further, the company acquired SolveDirect, which provides
cloud-based solutions for enterprises and service providers.
Cisco also acquired data-virtualization start-up - Composite
Software - for $180 million. Recently, it completed the
acquisition of energy management solution provider - JouleX - for
$107 million in cash and retention-based incentives.
We believe that these acquisitions will broaden Cisco's
customer base and network offerings, providing the company a
significant competitive edge.
Cisco carries a Zacks Rank #3 (Hold).
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