Cisco Systems' Management Discusses Intent to Acquire Meraki Conference (Transcript)

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Cisco Systems, Inc. (CSCO)

Intent to Acquire Meraki Conference Call

November 19, 2012 9:00 am ET

Executives

David McCulloch – Director-Corporate Communications

Robert Soderbery – Senior Vice President

Hilton Romanski – Head-Business Development

Rob Salvango – Vice President-Business Development

Analysts

Rod B. Hall – JPMorgan Chase & Co.

Jayson Noland – Robert W. Baird &Co. Inc.

Subu Subrahmanyan – The Juda Group

Presentation

David McCulloch

Good morning, everyone, and welcome to this conference call announcing Cisco’s Intent to Acquire San Francisco-based Meraki, a leader in cloud networking. Meraki products and technology offer midmarket customers easy to deploy on-premise networking solutions that can be centrally manage from the cloud.

This is David McCulloch I am Director of Corporate Communications of Cisco. And I am joined today by Robert Soderbery, the Senior Vice President of Cisco’s Enterprise networking group, by Hilton Romanski Head of Business Development for Cisco, and by Rob Salvango, Vice President of Business Development at Cisco.

A press release with information on today’s announcement can be found on the website of both companies at www.cisco.com and at meraki.com. A replay of this Cisco WebEx conference call will be available later today on the Cisco Investor Relations website at investor.cisco.com. And at the conclusion of today’s prepared remarks, we will be answering questions from participants who have registered online via the URL included in the press release. (Operator Instructions)

This presentation and the matters that both companies will be discussing today include forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including the expected completion of the acquisition and the timeframe in which this will occur, the expected benefits to Cisco, its product platforms and its customers from completing the acquisition, plans regarding Meraki personnel, and statements regarding our strategy to accelerate the adoption of software-based business models, our value proposition with customers, our competitive performance and new market opportunities.

You are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including, among other things, the potential impact on the business of Meraki due to the uncertainty about the acquisition, the retention of employees of Meraki and the ability of Cisco to successfully integrate Meraki and to achieve expected benefits, business and economic conditions and growth trends in the networking industry, customer markets in various geographic regions, global economic conditions and the uncertainties in the geopolitical environment and other risk factors set forth in Cisco’s most recent reports on Form 10-K and Form 10-Q.

Any forward-looking statements in this release and on this conference call are based on limited information currently available to Cisco, which is subject to change, and Cisco will not necessarily update the information. Unauthorized recording of this conference call is not permitted.

And at this point, I’d like to turn the call over to Rob Soderbery, Senior Vice President of Cisco’s Enterprise Networking Group. Good morning Rob.

Robert Soderbery

Thank you, Dave and good morning, And good morning to everyone on the call, thanks for joining us today. I’m very excited to have the opportunity to discuss our intent to acquire Meraki. Meraki provides us a new way to serve our customers in the mid market. These customers have the same IT needs as large organizations, but don’t have the same IT resources.

They struggled to deal with mobility, security, BYOD and the Cloud. Meraki provides a simple, secured and networking solution that reduces TCO while providing a comprehensive features that including wired, wireless, security, mobile device management and a rich set of L4-7 services. At Cisco, we’re focused on solving our customers business challenges by delivering intelligent architectures built on integrated products, services, and software platforms.

It’s for that reason that Meraki is a perfect strategic fit as they have pursued a similar vision to both developing an innovative, integrated software platform including a cloud-enabled OS for the devices and the hosted management solutions. This platform is designed from the ground up for the multi-tenant scale and reliable operation from the cloud. We’ve coupled this platform to the subscription-based model and a very attractive financial proposition for their clients.

You have heard us share our five foundational priorities. Meraki advances our strategic agenda in multiple dimensions. It extends our leadership in the core of our business and moves us further towards the software and cloud-based business model and advances our interest in the $5 billion midmarket. The midmarket is growing faster than large enterprises and Cisco is a relatively lower share. Thus a compelling solution in the midmarket accelerates our growth rates and further opens a large attractive market with an optimized product offer.

Additionally, the margin and growth economic on the Meraki business and the mix of product and services fit well into the Cisco financial model. Importantly when Meraki started as a pure play wireless provider, they have broadened their portfolio to provide a complete set of access solutions. After deep diligence, we became convinced that the Meraki solution was a compelling offer. We intend to position the Meraki cloud platform as a primary networking solution for our midmarket customers.

Now, let me talk a little bit about the deal itself. This was not an opportunistic deal. It was driven by our strategic intent and a shared vision we were able to develop in a very short amount of time with the Meraki senior team: Sanjit, John and Hans. We believe that offers material time to market advantages over what Cisco could achieve on its own and material differentiation over our competitors.

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