The Meraki acquisition comes hot on the heels of Cisco's $125 million purchase of cloud automation and management specialist Cloupia last week.
With the market already packed with its switches and routers, the networking giant is keen to boost its growing cloud services business. During its recent fiscal first quarter, the company's service revenue climbed 12% year-over-year, compared to 2% declines in both its switching and next-generation routing businesses.
Meraki touts technology for Wi-Fi, switching, security and mobile device management, which is managed from the cloud. With a growing number of businesses letting employees hook their own smartphones and tablets up to corporate networks (a phenomenon known as Bring Your Own Device, or BYOD), Cisco sees an opportunity to tap into this trend through the Meraki.In addition to BYOD, Meraki also supports guest networking, application control, WAN [wide area network] optimization and application firewall services. "The deal is consistent with Cisco's strategy to bolster its software and services offerings to drive greater recurring revenues at higher margins," wrote Amitabh Passi, an analyst at UBS, in a note. "We believe Cisco approached Meraki a few weeks ago with the offer looking to bolster its cloud networking portfolio, while Meraki will benefit from Cisco's global reach." Passi maintained his buy rating and $22 price target on Cisco.
Funded by Sequoia Capital and Google (GOOG), Meraki was founded in 2006 by Massachusetts Institute of Technology Ph.d candidates. The San Francisco-based firm has racked up more than 10,000 customers, which include Burger King (BKW), hotel giant Accor and DineEquity's (DINE) Applebees. "In our view, this deal further enhances Cisco's Unified Access platform with an expanded lineup of cloud-based networking solutions," wrote Brian White, an analyst at Topeka Capital Markets, who has a buy rating and $23 price target on Cisco. Cisco's Unified Access platform aims to simplify IT operations by helping businesses manage both their physical and wireless networks.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV