Cisco acquires WebEx

Cisco announced the acquisition of Webex- a web based conferencing and collaboration service provider. In an all cash offer of $3.2 billion Cisco gains access to the SME market along with a new but growing subscription based business model.

The offer of $57 per share for WebEx communications Inc is 23% premium over yesterday's closing price at Nasdaq. The buying price is almost double the January stock price of WebEx. WebEx made $380 million in net earnings in FY2006. It has around 2100 employees serving 28000 customers, approximately 2.2 million users across 85 countries. WebEx is the market leader in its space with around 65% market share followed by Microsoft and Citrix. Close to 80% of its business is in the non-enterprise segment. It has a considerable reputation in the SME space.

WebEx brings to Cisco market knowledge of SME, an area where Cisco hasn't been a player to be reckoned with. Also, WebEx offers Cisco with a unique business model. Subscription based services of unified communication and collaboration is in its nascent stage. As this model gains credibility, improves reliability the platform can offer an affordable channel for SME's to access the latest developments in unified communication and collaboration being disassociated with the technology risks.

The unified communication landscape is evolving. The game is on.