Cisco to buy BroadSoft for $1.9 bn to enhance collaboration business

Cisco collaboration businessCisco Systems announced its deal to acquire BroadSoft in a deal valued at nearly $1.9 billion or $55 per share to enhance its collaboration capabilities.

The loss making BroadSoft is headquartered in Gaithersburg, MD. BroadSoft revenue rose to $88.8 million (+9 percent) with a net loss $3 million in the second quarter of 2017. BroadSoft revenue grew to $168.4 million (+9 percent) with a net loss of $13 million in the first six months of 2017. BroadSoft expects revenue in the range of $380 million to $390 million in 2017.

BroadSoft’s hosted offerings, sold through the Service Providers and aimed at small and medium businesses, are complementary to Cisco’s on-premises and enterprise-centric HCS offerings.

BroadSoft has partnerships with over 450 telecom carriers in 80 countries – including 25 of the top 30 globally – to 19+ million BroadSoft business subscribers.

Recently, Cisco announced its 200th acquisition by acquiring Perspica to accelerate the networking company’s AppDynamics’ vision.

Cisco revenue in Q3 2017 from collaboration business fell 4 percent to $1,022 million. The chart indicates that Collaboration business is the third largest business for Cisco — contributing 9 percent of total revenue.
Cisco revenue Q3 2017 from collaboration

Cisco strategy

Cisco said it will be combining BroadSoft’s cloud voice and contact center solutions delivered via Service Provider partners with Cisco’s  meetings, hardware and services portfolio for businesses of all sizes.

The acquisition of BroadSoft is part of Cisco’s strategy in Unified Communications and enhances its ability to address the millions of aging TDM lines poised to transition to IP technology and cloud native solutions over the coming years.

Rowan Trollope, senior vice president and general manager of Cisco’s Applications Business Group, said: “We believe that our combined offers, from Cisco’s collaboration technology for enterprises to BroadSoft’s suite for small and medium businesses delivered through Service Providers will give customers more choice and flexibility.”

BroadSoft employees will join Cisco’s Unified Communications Technology Group led by vice president Tom Puorro, under the Applications Group led by Rowan Trollope.

“Cisco recently marked a significant milestone with our 200th acquisition. Acquisitions continue to be a core part of our innovation strategy and over the past two years have helped Cisco accelerate or enter areas such as IoT, application intelligence, AI, hyperconvergence and SD-WAN,” said Rob Salvagno, vice president of Cisco Corporate Development.

Baburajan K

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