Cisco acquires WebEx

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Cisco acquires WebEx

Cisco has acquired WebEx for approximately $3.2 billion, according to the Cisco website. WebEx is one of the most well-known companies in the hosted on-demand collaboration application space. Although WebEx is very well-known (who hasn't used it?), in my opinion Cisco overpaid for WebEx. First, the hosted collaboration space is very crowded. You have Raindance, Placeware (now part of Microsoft), Genesys, and a dozen other smaller players all in the web collaboration space.  This acquisition reminds me how eBay bought Skype for around $3 billion and have yet to recoup that investment, though they're still trying with new ventures such as Skype Prime.

Then you have Microsoft Office Live Communications Server 2007 coming out very soon, which features built-in collaboration capabiltiies and is part of Microsoft's "unified communications" strategy. Why pay WebEx or any other hosted service to rent collaboration services when you can buy collaboration capabilities with a one-time license fee? I've never been a fan of hosted software, but maybe that's just me. In fact, Microsoft's unified communications strategy, including VoIP communications, video, and collaboration puts Microsoft in direct competition with Cisco. Perhaps this is why Cisco scooped up WebEx?

In any event, Cisco will commence a cash tender offer to purchase all of the outstanding shares of WebEx for $57 per share and will assume outstanding share-based awards, for an aggregate purchase price of approximately $3.2 billion, or approximately $2.9 billion net of WebEx's existing cash balance.

"As collaboration in the workplace becomes increasingly important, companies are looking for rich communications tools to help them work more effectively and efficiently," said Charles H. Giancarlo, Chief Development Officer at Cisco. "The combination of Cisco and WebEx will deliver compelling solutions accelerating this next wave of business communications.

Cisco believes the network is a platform for all forms of communications and collaboration, and WebEx's technology and services portfolio complement Cisco's leadership in the Unified Communications and collaboration market, while providing Cisco with a new and unique business model to expand its presence in the fast-growing SMB market," Giancarlo continued.

"Cisco and WebEx share a vision of web collaboration as a key to accelerating business processes and critical to durable competitive advantage," said Subrah S. Iyar, CEO of WebEx. "Cisco's global reach and customer focus will help us extend our core web collaboration applications and continue to broaden the services we offer through the WebEx Connect platform."

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