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The Four Companies That Should Be on Cisco’s Shopping List

Now that the new tax law is freeing up big tech firms to bring back tens of billions of dollars stored overseas, a spate of new tech acquisitions may be on the horizon. And one of the most aggressive buyers is likely to be Cisco Systems.

At a recent meeting with reseller partners, CEO Chuck Robbins hinted that Cisco would use some of the $68 billion it holds overseas for acquisitions, said a person who was present. Since Mr. Robbins became CEO in mid-2015, his top priority has been to expand in subscription-based software to offset declines in Cisco’s traditional hardware businesses. Logical areas for him to target now include cybersecurity, where Cisco has already put down roots, and data center software, where it is relatively less established.

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There are other companies that offer similar device protection capabilities, such as public company FireEye. It also has some of the automation technology that Splunk has. But FireEye has a market capitalization of $2.7 billion, ensuring it would cost significantly more than Crowdstrike. The argument against FireEye is that its core business of sandboxing technology to help companies test malware faces stiff competition. A couple of years ago, rumors that Cisco would acquire FireEye were so intense that in 2015 then-CEO John Chambers had to rebut the idea on an earnings call. While Cisco has become more interested in security since then, its attitude toward FireEye likely has not changed. FireEye declined to comment.

David Ulevitch commented on this article.
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Red Hat dominates the market for open-source Linux server operating systems and would fit with Mr. Robbins’ software push.