In this article, we are going to look over the 2012 acquisitions made by Cisco (CSCO) and how they have affected the respective quarterly financial statements of the company.
February 24, 2012 - Cisco decided to buy privately-held Lightwire, Inc. Headquartered in Allentown, Penn., Lightwire develops advanced optical interconnect technology for high-speed networking applications.
"The acquisition of Lightwire will support our data center and service provider customers as they manage the continuing deluge of network traffic alongside tight capital and operating budgets," said Surya Panditi, senior vice president, Cisco Service Provider Networking Group. "With the combined know-how from Cisco in silicon design and Lightwire in CMOS photonics, we will transform Cisco's optical connectivity business to an integrated technology platform that supports our customers' burgeoning need for cost-effective high-speed networks."
March 15, 2012 - Cisco decided to buy NDS Group Ltd., a leading provider of video software and content security solutions that enable service providers and media companies to securely deliver and monetize new video entertainment experiences. It just meant better video offerings for service providers allowing the subscribers to view, search and navigate digital content the way they choose, anytime, anywhere and on anything they like.
March 28, 2012 - Cisco decided to buy privately held ClearAccess, a Vancouver, Washington based company that provides TR-069-based software to service providers for the provisioning and management of residential and mobile devices.
"The ClearAccess acquisition reinforces Cisco's commitment to service providers by accelerating software architectural advancements in mobility, cloud and managed devices, and video," said Jamie Lerner, vice president and general manager, Cisco Network Management Technology Group, Service Provider Application.
May 3, 2012 - Cisco decided to buy privately-held Truviso, Inc., which provides scalable, real-time network data analysis and reporting software. Together, instant access and visibility into network use and services to improve efficiency of businesses is the sole aim of this acquisition.
"Customers want to be able to tap into and better analyze the enormous volume of data traversing their networks to identify ways to enhance services and generate new revenue opportunities," said Jamie Lerner, vice president and general manager, Cisco Network Management Technology Group.
July 16, 2012 - Cisco decided to buy Virtuata that provides innovative capabilities for securing virtual machine level information in data centers and cloud environments. Together, the main aim was stable and enhanced network security for virtual systems allowing customers to fast-track the deployment of multi-tenant, multi-hypervisor cloud infrastructures.
September 26, 2012 - Cisco decided to buy ThinkSmart Technologies, which delivers location data analysis using Wi-Fi technology. I think this was an evolution from the acquisition of Truviso. Better analytics features using Wi-Fi technology, which means it is even cheaper!
October 4, 2012 - Cisco decides to buy vCider for the development of virtual network overlay technology for secure data center infrastructure. VCider is to be integrated into Cisco's Cloud Computing organization and will play an important role in the Cisco Open Network Environment (ONE) strategy, particularly in support of OpenStack.
November 15, 2012 - Cisco decides to buy Cloupia, which automates converged data center infrastructure - allowing enterprises and service providers to simplify the deployment and configuration of physical and virtual resources from a single management console.
"Cisco's data center strategy is based on the premise of making it easier for customers to deploy a unified and integrated infrastructure that is efficient, fast, and flexible," said David Yen, senior vice president and general manager, Cisco Data Center Business Group.
November 18, 2012 - Cisco decides to buy Meraki, Inc., a leader in cloud computing.
"The acquisition of Meraki enables Cisco to make simple, secure, cloud managed networks available to our global customer base of mid-sized businesses and enterprises. These companies have the same IT needs as larger organizations, but without the resources to integrate complex IT solutions," said Rob Soderbery, senior vice president, Cisco Enterprise Networking Group.
If we categorize the acquisitions according to market opportunity, here's what we get:
Data Center - Cloupia, vCider, Virtuata
Network Management - ClearAccess, Truviso
Routing & Switching - Lightwire
Cloud Networking - Meraki
Wireless - ThinkSmart Technologies
Video - NDS Group
It is noticeable that Meraki is this year's first acquisition in the cloud networking market. Now, it is understandable that this is one of the fast evolving markets now, and gaining a head start is always wise for Cisco.
Here's a rundown on the respective financial statements (in millions):
3rd qtr. 2012
3rd qtr. 2011
4th qtr. 2012
4th qtr. 2011
1st qtr. 2013
1st qtr. 2012
Source: Company financial press releases
It is clear that with the acquisitions, Cisco has been consistently improved in comparison to the previous year. And in addition to that, amortization costs are really not too up above the mark, so it can be said that Cisco is operating at an optimum efficiency level.
Let's check how it is performing with the rest of the companies.
With EPS of 1.55, compared to Alcatel Lucent's (ALU) 0.62 and others below that mark, and PE ratio of 12.15, compared to Juniper Networks' (JNPR) 47.5 and Polycom's (PLCM) 37.04, Cisco does seem to be well ahead of others. But it must be noted, Cisco is supposedly the biggest in the niche it operates it. Looking at the successive acquisitions in the upcoming markets and the improving margins, we can safely say that Cisco is a good buy at the moment.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.Equity investing is subject to market risks. Please consult your personal financial adviser before making a decision.