Networking equipment maker
Cisco Systems Inc.
) announced a definitive agreement to acquire cyber security firm
) for $2.7 billion. The deal will be completed in the second half
Cisco will pay $76 per share in cash for Sourcefire. After the
announcement, shares of Sourcefire jumped 28% over Monday's
Columbia, MD-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, which is an
open-source intrusion detection system (IDS). Sourcefire
solutions have been downloaded 4 million downloads to date
(company sources). The company is particularly strong in the
Upon the completion of the deal, Cisco will strengthen its
position in the network security market and acquire increased
exposure to government and corporate customers. The acquisition
will also allow Cisco to develop and offer end-to-end security
platforms in the industry.
The acquisition comes at an opportune time when the Internet
security market is evolving rapidly and Cisco is aligning its
long-term growth strategy around the "Internet of Everything."
Other IT bellwethers such as
) could also get acquisitive in order to boost core
Cisco Systems is the leading provider of IP-based networking
services and other products. As a part of its acquisition
strategy, Cisco bought 11 companies in 2012. In January, 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
The company continued its acquisition spree and bought
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 its acquisition of energy management solution provider
JouleX for $107 million in cash and retention-based
We believe that these acquisitions will broaden Cisco's
customer base and network offerings, providing the company with a
significant competitive edge.
Cisco's revenues in the second quarter of fiscal 2013
increased 1.7% sequentially and 5.2% year over year to $12.1
billion. Products (78.0% of total revenue) were up 3.3% year over
year to $9.4 billion. Services (22.0% of total revenue) jumped
12.5% year over year to $2.7 billion.
Cisco carries a Zacks Rank #3 (Hold).
CISCO SYSTEMS (CSCO): Free Stock Analysis
EMC CORP -MASS (EMC): Free Stock Analysis
SOURCEFIRE INC (FIRE): Free Stock Analysis
INTL BUS MACH (IBM): Free Stock Analysis
JUNIPER NETWRKS (JNPR): Free Stock Analysis
SYMANTEC CORP (SYMC): Free Stock Analysis
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