- Cisco acquires ThreatGRID, a NYC startup, for an undisclosed sum.
- ThreatGRID will join SourceFire, acquired last year, in Cisco's bid to expand its role in cyber security.
- ThreatGRID also helps Cisco realize its dream to offer the Internet of Everything to its clients.
- This acquisition positions Cisco well as a company to buy as its stock will increase in value.
Cisco (NASDAQ:CSCO), as one of the first companies to experience commercial success selling routers, has seen its financial outlook take a beating in recent years as the trend away from hardware networking continues. The company was at the pinnacle of the dot.com era in 2000 as it pushed past Microsoft (NASDAQ:MSFT) to become the most valuable company in the world with a market cap worth over $500 billion. Cisco saw disastrous losses in 2011 as it floundered in the domestic arena, resulting in a need to cut $1 billion in expenses.
- Warning! GuruFocus has detected 5 Warning Signs with CSCO. Click here to check it out.
- CSCO 15-Year Financial Data
- The intrinsic value of CSCO
- Peter Lynch Chart of CSCO
Today, Cisco, with a market cap of $119 billion as of May 2014, continues to branch out including a stronger foray into the burgeoning software networking solutions business. Knowing that cyber security will continue to be an in-demand product, Cisco sought to shore up its standing in that particular area with the purchase of ThreatGRID.
Tapping Into the Cloud
With the use of the cloud when networking continuing to increase, Cisco's acquisition of ThreatGRID adds to the arsenal of cyber security solutions they can offer their clients. ThreatGRID pairs perfectly with SourceFire, whom Cisco purchased in 2013 for $2.7 billion. Not only is cyber security also the focus of SourceFire, the ten year old company previously worked with ThreatGRID in a partnership helping to ensure a seamless transition.
Threats to Security Will Increase
The level of information that is vulnerable today puts companies at risk of more than just a few missing files. Cisco's strategy to invest large amounts of money into shoring up their cyber security arm with the purchase of ThreatGRID aligns them to tap this growing market.
Security Threats Can Benefit Competition
Of course, threats to the sensitive financial and personal information of consumers that a company deals with are not the only concern.ThinkGRID makes excellent use of the cloud as a backup mechanism should information be lost. Tapping into the cloud using ThreatGRID's proprietary analysis of malware and actionable intelligence that pinpoints threats in near real-time positions Cisco to capture new commercial clients and provide current ones with a full palette of IT solutions.
Cisco: A Company That Adapts to Changing Times
Though Cisco owes its early success to having a strong base of hardware solutions that met the needs of businesses, as the trend moved away from that sector, and they faced competition from newcomers to the game, like Juniper Networks (NYSE:JNPR) who took some of Cisco's share of the consumer market. Cisco's stocks dipped to $18.08 that year after a high of $23.94 just two years before that.
From the Investor's Standpoint
Though the years have not always been smooth for Cisco, with their innovative 'Internet of Everything' approach, the company stands poised to tap into a market that has, until now, been largely unexplored. By offering their clients one-stop shopping when it comes to all their computing needs, Cisco helps streamline the process, keeping their costs low wile offering a premium products to their clients. Clients can utilize one of Cisco's routers, buy into a security suite to protect the integrity of their data and hedge against the loss of that data by using the ThinkGRID pay-as-you-go scalable options for backup.
Investors need only to look at Cisco's willingness to step outside the box when it comes to hardware to realize they are a company that is worth investing in. Their end of the year stock prices have steadily grown since 2011 when Cisco underwent some belt-tightening, from $19.65 in 2012 to $22.43 at the end of 2013.
With Cisco's 54% share of the switch and router market and sales that topped $48.6 billion in 2013, the company is rated as number 12 among the most valuable brands in the world, according to Forbes. In addition, Cisco has been pouring money into its research and investment divisions so that it can fully fund its 'Internet of Everything' initiative. Investors that stick with the company, or invest now, will see huge dividends.