Venture

Cisco Acquisitions Drive Company Growth

This morning, Cisco announced its intent to buy Luxtera, a Carlsbad, California-based semiconductor company, for about $660 million.

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Luxtera is the hardware company’s sixth acquisition of 2018. In November, Cisco acquired U.K.-based Ensoft, a company that “provides software solutions for service provider networks.” Prior to that purchase, Cisco spent $2.35 billion on Duo Security, the Ann Arbor-based cybersecurity software company that had raised $119 million in venture capital since its founding in 2010, according to Crunchbase.

Cisco, which was founded in 1984, is known to be acquisitive. The company reached its 200th acquisition milestone in October 2017, and in the past ten years, Cisco has acquired a total of 78 companies. Here’s a look at its acquisition pace since 2009:

Of those acquisitions with a known price tag, Cisco has spent nearly $32 billion. Nine of the company’s 78 purchases were made at a reported price of over $1 billion.

Acquired Organization NameAnnounced DatePrice (M USD)
NDS GroupMarch 2012$5,019M
AppDynamicsJanuary 2017$3,700M
TandbergOctober 2009$3,400M
Starent NetworksDecember 2009$2,900M
SourcefireJuly 2013$2,700M
Duo SecurityAugust 2018$2,350M
BroadSoftOctober 2017$1,900M
Jasper TechnologiesFebruary 2016$1,400M
MerakiNovember 2012$1,200M

According to the company website, “Cisco’s growth strategy is based on identifying and driving market transitions. Corporate Development focuses on acquisitions that help Cisco capture these market transitions.”

Cisco’s focus on acquiring companies with a desirable technology stack was evident in its $3.6 billion purchase of AppDynamics in 2016. At the time, TechCrunch’s Matt Lynley noted that networking is moving on to a multiplicity of devices and applications and “Cisco is continuing that move beyond its usual competency.” That certainly may have been the case for its Duo Security acquisition earlier this year, which added to the number of security-focused companies it has purchased. In 2017, Steve Morgan of Cybersecurity Ventures predicted that “spending on cybersecurity products and services will exceed $1 trillion cumulatively over the next five years.”

Looking to 2019, it’s unlikely we will see Cisco depart from its history of acquisitions. What could change is the price it is willing to pay for startups, however. Tech stocks are taking a beating, and recession rumors are plentiful. In that environment, it’s likely private valuations will take a beating, making it easier for Cisco, and others, to scoop startups up on the cheap.

Illustration Credit: Li-Anne Dias

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