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The future of Cisco (NASDAQ:CSCO) has suddenly become very cloudy, but a 0.27% increase to $17.99 in its share price in pre-trading, not to mention common sense, indicates that, counter-intuitively speaking, their cloudy future is a very good thing. It will an interesting stock to watch on the NASDAQ today.
The company announced this weekend that it will acquire Meraki, a mere six-year old, for $1.2 billion USD. Meraki specializes in cloud management services for Wi-Fi, switching, security, and mobile devices.
Cisco, currently the world’s largest maker of computer networking equipment, was started by a husband and wife working at Stanford University who did not have an efficient way to email each other from one building to another. Out of this problem came opportunity, and the multi-protocol router was born.
Meraki was started by three MIT computer-science graduate students in 2006 to focus on providing services to “midsize companies that otherwise could not afford to run their own networking and security services.”
The deal, expected to be consummated within the nest three months, still requires regulatory approval. It is a 180° change in direction for Meraki, whose published strategy all along has been to go public. Somehow, it must have been difficult to look a $1.2 billion sure thing in the eye without changing plans. Especially as Cisco’s plan is to let Meraki operate as a stand-alone company. A very wise move on Cisco’s part, I might add.
Meraki will form the basis of a new Cisco group to be named Cloud Networking. Meraki’s CEO, Sanjit Biswas will remain at the helm of the company. By no means intending to insult our readers’ intelligence, we nonetheless recognise that there are many people who do not understand what cloud computing, Meraki’s specialty, really is.
If you are not a computer geek or a high school student, and especially if you were born before 1980, you are probably a member of that larger group. (Yeah. Me too.) Simple put, it is the storage of software programs and files in a remote data center rather than being loaded on individual PC’s or other devices.
Robert Soderberry, a Senior VP at Cisco, said, “Meraki’s solution was built from the ground up optimized for cloud with tremendous scale, and is already in use by thousands of customers to manage hundred of thousands of devices.”
Frank Calderoni, Cisco’s CFO, said, “The deal continues a longtime strategy of growth through acquisitions. We expect to be active with acquisitions to drive our growth.”
The old saying that “Behind every cloud there is a silver lining,” will sonn be completely misunderstood as it is replaced with “Every cloud IS a silver lining.”
