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Cisco Acquires WebEx to Extend Reach in SMB Market


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March 15, 2007

Cisco Acquires WebEx to Extend Reach in SMB Market

By Spencer D. Chin
TMCnet Web Editor

Cisco Systems (News - Alert) has acquired WebEx, a supplier of on-demand collaboration applications, as the network company seeks to extend its vision for Unified Communications, particularly within the Small to Medium Business (SMB) market.

Under the proposed deal, Cisco will tender an offer to buy the outstanding shares of WebEx for $57 per share. The aggregate purchase price is $3.2 billion; excluding WebEx’s existing cash balance brings the price down to $2.9 billion.
The deal, expected to close in Cisco’s fourth fiscal 2007 quarter, will be neutral to the company’s non-GAAP 2008 fiscal year earnings.
Founded in 1995, WebEx has its initial IPO in July 2000 and reported sales of $380 million last year. It has under 2,200 employees.
Cisco hopes to leverage WebEx’s technology and services portfolio that allows companies to engage in real-time and asynchronous data conferences over the Internet as well as share web-based documents and workspaces. WebEx has a subscription-based services strategy that Cisco plans to preserve.
“As collaboration in the workplace becomes increasingly important, companies are looking for rich communications tools to help them work more effectively and efficiently,” said Cisco chief development officer Charles Giancarlo, in a statement. “The combination of Cisco and WebEx will deliver compelling solutions accelerating this next wave of business communications.”
Cisco has made a number of moves to promote its Unified Communications vision, designed to help businesses integrate their communications systems with their IT infrastructure onto a single, unified communications platform.
Earlier this month, the company said it would team with IBM to develop a platform for unified communications and collaboration client development, based on open technologies such as Eclipse and OSGi.
Last October, Cisco acquired San Jose-based Orative Corp. for $31 million, in an effort to bring its Unified Communications platform to mobile devices.
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Spencer Chin is a contributing editor for TMCnet. To see more of his articles, please visit his
columnist page.


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