Splunk, a San Francisco-based company, is known for its data observability services, which allow companies to monitor their internal systems for network health and cybersecurity risks. The acquisition is part of Cisco's strategy to reduce its dependence on one-time hardware sales and shift towards software and services. However, the deal was not well-received by Cisco investors, with shares falling 3.9% following the announcement.
Key takeaways:
- Cisco Systems Inc. has agreed to buy Splunk Inc. for about $28 billion, marking its biggest acquisition yet and a significant move into software and AI-powered data analysis.
- The deal is expected to be cash-flow positive in the first year after closing and add $4 billion in annual recurring revenue.
- Splunk, known for data observability services, will help Cisco reach a broader customer base and provide more detailed insights into network and computing operations.
- The acquisition was not well-received by Cisco investors, with shares dropping 3.9%, as some believe the purchase price was too high.