UPDATED 13.15 BST: Cisco confirmed weekend media reports it will acquire US telecommunications software company BroadSoft, announcing a deal for $1.9 billion ahead of BroadSoft’s annual customer conference event in Phoenix which kicks off today.
In recent quarters Cisco slashed costs in its lower growth hardware segments as it bids to change its focus to software-based systems and new technologies.
“We chose BroadSoft as it provides a portfolio of cloud collaboration platforms and business applications, which strengthen our cloud investments and ability to deliver collaboration solutions to our global telecom provider customers,” Rob Salvagno, head of Cisco’s M&A and venture investment team, wrote in a blog: “Following the close of the acquisition, Cisco and BroadSoft will provide a comprehensive SaaS portfolio of cloud based unified communications, collaboration, and contact centre software solutions and services for customers of all sizes.”
He continued: “Collaboration is the first step to business digitisation and BroadSoft has partnerships with over 450 telecom carriers in 80 countries – including 25 of the top 30 globally – to 19+ million BroadSoft business subscribers. BroadSoft’s portfolio is complementary to our existing on premises and enterprise-centric Hosted Collaboration Solutions (HCS), as well as Cisco’s overall cloud investment strategy.”
The acquisition is expected to close during the first calendar quarter of 2018, subject to the usual regulatory reviews.
Once complete, BroadSoft employees will join Cisco’s unified communications technology group (led by Tom Puorro, VP and general manager in the Applications Group).
Cisco recently suffered a fall in revenue for its traditional switches and routers business and focused on areas including IoT and cloud computing.
In its latest earnings statement – covering the three months to 29 July – Cisco reported net income of $2.4 billion on revenue of $21.1 billion, which was down 4 per cent on the same period of 2016.
Earlier this month it partnered with Telenor to launch a cloud platform business designed to simplify the launch of new services in IoT and other industry verticals by operators.
This is Cisco’s second major acquisition this year. In January it bought AppDynamics for $3.7 billion, which it said was part of a strategy to “transition toward software-centric solutions that deliver predictable recurring revenue.”
Last week, a Cisco deal with machine-learning startup Perspica was touted as its two hundredth acquisition, and one which supported and accelerated “the AppDynamics vision”.
According to BroadSoft’s website, it is the industry leader in cloud unified communications, providing a “comprehensive, mobile-integrated and open communication suite for businesses, with carrier-class reliability and security”.
BroadSoft normally sells its products to companies including Verizon and AT&T, which then resell the software to their business customers. Recently, it attempted to sell directly to these customers, which could jeopardise its relationships with its telecommunications partners, Reuters said quoting a Barclays research report.
Mobile World Live‘s US editor Diana Goovaerts is attending BroadSoft Connections this week in Phoenix, Arizona and will update on developments as they happen.