How Cisco’s Recent Acquisitions Fit

Including the recently announced acquisition of BroadSoft, Cisco Systems (CSCO) has done seven acquisitions so far in 2017, according to Crunchbase data. Security and network technology peers Juniper Networks (JNPR), Extreme Networks (EXTR), IBM (IBM), and Microsoft (MSFT) have done one, two, four, and ten acquisitions, respectively, so far this year.

Cisco’s recently closed acquisitions include Springpath and Perspica. The acquisition of Springpath is expected to bolster Cisco’s competitiveness in the data center market as a provider of hyper-convergence software.

The acquisition of Perspica is expected to enhance Cisco’s capabilities in the provision of advanced AI (artificial intelligence) and machine learning technologies.

Just before it released its fiscal 1Q18 results, Cisco announced that it was acquiring BroadSoft (BSFT) for $1.9 billion. BroadSoft is a provider of cloud calling and contact center solutions and boasts 19 million subscribers. The acquisition is expected to help Cisco offer a broader range of collaboration solutions.

Cisco has also partnered with Alphabet’s (GOOGL) Google to achieve what it describes as “bringing the best of cloud to enterprise.” The partnership involves developing new hybrid cloud solutions.

Acquisitions have worked fairly well for Cisco historically, especially on the company’s top line. For example, acquisitions boosted Cisco’s revenues in fiscal 1Q18 by 60 basis points on a YoY (year-over-year) basis.

However, acquisitions caused a $0.01 negative impact on its adjusted EPS (earnings per share) in fiscal 1Q18, which could be attributed to the costs associated with the integration of its acquired assets.