SAN JOSE, Calif. - Cisco Systems Inc. (NASDAQ: NASDAQ:CSCO) today completed its acquisition of data analytics leader Splunk (NASDAQ:SPLK) Inc., marking a significant expansion of Cisco's capabilities in data-driven business operations. The deal, valued at approximately $28 billion, has positioned Cisco as one of the largest software companies globally and aims to deliver enhanced visibility and insights across organizations' entire digital footprints.
The acquisition allows Cisco to integrate its networking prowess with Splunk's security and observability solutions, providing customers with a unified view of their digital landscapes. This integration is intended to help organizations proactively defend infrastructure, prevent outages, and optimize network experiences.
Chuck Robbins, Chair and CEO of Cisco, expressed enthusiasm about the acquisition, stating, "We will revolutionize the way our customers leverage data to connect and protect every aspect of their organization as we help power and protect the AI revolution."
Gary Steele, Executive Vice President and General Manager at Splunk, highlighted the value this merger will bring to customers, offering a comprehensive visibility and insights platform that promises unprecedented resilience through its security and observability product portfolio.
The adoption of artificial intelligence (AI) in business operations is rapidly increasing, and Cisco's acquisition of Splunk is a strategic move to support this trend. The company aims to provide the infrastructure, data, security, and real-time observability necessary for AI applications.
The transaction details reveal that Cisco acquired Splunk for $157 per share in cash. The acquisition is expected to be cash flow positive and non-GAAP gross margin accretive in Cisco's fiscal year 2025 and non-GAAP EPS accretive in fiscal year 2026. Additionally, Splunk's common stock has ceased trading on NASDAQ as of today.
Cisco and Splunk anticipate rolling out new product innovations in the coming months, with further showcases planned for Cisco Live and .conf24 events in June 2024.
This strategic move is based on a press release statement.
InvestingPro Insights
As Cisco Systems Inc. (NASDAQ: CSCO) embarks on this transformative acquisition of Splunk Inc ., it's essential to understand the company's financial health and market position. With a robust market capitalization of $198.13 billion, Cisco is a heavyweight in the technology sector. Its current P/E ratio stands at a competitive 14.87, showcasing the company's ability to generate earnings relative to its share price. This valuation becomes even more attractive when considering the adjusted P/E ratio for the last twelve months as of Q2 2024, which slightly lowers to 14.09.
InvestingPro Tips provide further insights into Cisco's financial prudence and shareholder value. Notably, Cisco holds more cash than debt on its balance sheet, indicating a strong liquidity position. This financial stability is complemented by the company's consistent history of dividend payments, having maintained them for 14 consecutive years. These dividends have been on the rise for 13 of those years, reflecting Cisco's commitment to returning value to its shareholders.
While analysts have revised their earnings expectations downwards for the upcoming period, Cisco's stock is known for its low price volatility, suggesting a level of stability in its share price. This characteristic may be particularly appealing to investors who prioritize consistency and risk aversion in their portfolios. For those seeking more in-depth analysis, InvestingPro offers additional tips on Cisco Systems, which can be accessed at https://www.investing.com/pro/CSCO. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover why Cisco is considered a prominent player in the Communications Equipment industry with cash flows that can sufficiently cover interest payments.
InvestingPro currently lists 11 additional tips for those interested in a deeper dive into Cisco's financials and market prospects. Cisco's strategic acquisition of Splunk may well position the company to leverage its strengthened capabilities in AI and data analytics, which could be a significant driver of future growth and profitability.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.