$3.2 billion was the price tag announced last Thursday when corporate tech giant (soon to be conglomerate) Cisco purchased web-conferencing magnate WebEx. I cannot say that I am shocked. Cisco has been expanding its core business for some time now, ever since a scare by Bay Networks in 1999, Cisco has been making a run beyond networks. In 2005 Cisco jumped into the physical security space with an IP camera offering, but this foray continues to show the movement of our tech giants from vertical segmentation to complete encapsulation of the business process.
What does surprise me is the price tag, which includes a buyout of remaining shares at $57/share. The market price at the time of the deal was $46 and change, and honestly I thought WebEx was beginning to lose its cachet a bit. Service offerings from GoToMyPC and Live Office (Microsoft) have definitely made a dent in Web-Ex’s market appeal. Although as a former user, I do enjoy the advanced functionality but could have lived without the advanced price-tag.
In the end though, I believe this deal speaks more about Cisco’s expansion than Web-Ex’s economic development. Cisco is a huge player, they always have been, but their migration from networks to services is something to write books about.
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