This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Cisco Makes Meraki Move, Eyes Cloud Dollars

NEW YORK ( TheStreet) - Cisco (CSCO - Get Report) opened its wallet again late Sunday, announcing a $1.2 billion deal for privately-held cloud networking specialist Meraki.

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 - Get Report), 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.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BKW $35.50 0.00%
CSCO $27.49 0.00%
GOOG $693.01 0.00%
HPQ $12.27 0.00%
AAPL $93.74 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs