So, here’s the scoop: Cisco is making its biggest move ever by buying Splunk, a cybersecurity software company, for a whopping $28 billion in cash. They’re shelling out $157 per share for this deal.
Why is this such a big deal? Well, Splunk is all about helping businesses keep their data safe from cyberattacks and troubleshoot tech problems faster. Meanwhile, Cisco is known for its computer networking equipment and has been getting serious about cybersecurity to meet customer demands.
Cisco’s CEO, Chuck Robbins, is really excited about this. He’s all about harnessing the power of artificial intelligence, and Splunk’s tech is going to help Cisco do just that to protect networks. In his words, they’re going to drive “the next generation of AI-enabled security and observability.” Fancy, right?
The deal is set to close in 2024, and Cisco thinks it’ll boost its profits in the first year and its non-GAAP earnings in the second year. But here’s the kicker: this $28 billion price tag is about 13% of Cisco’s total market cap. That’s a big chunk of change for a company that usually avoids blockbuster deals.
Why’s Cisco going all-in on cybersecurity, you ask? Well, the public cloud has been eating up some of Cisco’s traditional business, so they’re looking for new money-makers. Cybersecurity has been their main bet, and it seems to be paying off.
But here’s the twist: Cisco’s stock hasn’t been keeping up with the tech scene. While the Nasdaq has been soaring, Cisco’s stock has only gone up by 12% this year. And over the past five years, it’s been even worse, with just a 10% gain compared to the Nasdaq’s massive 66% jump. So, this big move with Splunk might be just what Cisco needs to get back in the game.
