Cisco To Acquire Cloud Management Company Cloupia for $125M

Company boasts continued growth following 2011 earnings stumble.

 @YannickLeJacq
on November 15 2012 1:49 PM
Cisco Systems
Cisco Systems Inc. (NASDAQ:CSCO) logo Cisco

Cisco Systems Inc. (Nasdaq: CSCO) announced Thursday that it plans to acquire the privately-held software firm Cloupia in an effort to bolster the networking giant’s offerings to better manage data-center infrastructure.

Cloupia, a small company based in Santa Clara, Calif., provides software to help companies manage their data centers' servers by streamlining the entire process and centralizing it onto a single screen, making the labor-intensive procedure of running a network of public and private cloud networks much simpler for large businesses.

As a leading provider of internet equipment, Cisco offers a similar range of services to its corporate clients, suggesting that the buyout might simply be a move to acqui-hire top talent from an up-and-coming rival. The company said in its statement that the Cloupia team will be absorbed into Cisco’s Data Center Group, which is currently lead by senior vice president David Yen.

“Together, Cisco and Cloupia will extend the converged management benefits of the Cisco Unified Computing System (UCS) Manager and UCS Central beyond compute to include server, network, storage, and virtualization functions, simplifying the IT administrator’s operations and improving overall reliability in system deployment,” Cisco said in a statement on the company’s blog.

Marketwatch reported that the San Jose, California-based company is acquiring Cloupia for $125 million in cash and retention-based incentives. The deal is expected to close in the second quarter of Cisco’s 2013 fiscal year.

Cisco launched a massive restructuring plan last year following a series of underwhelming earnings reports in order to refocus on several core aspects of internet equipment like routing and switching gear that transports data between different networked computers.

And so far, the plan seems to have worked. Earlier this week, the company reported better than expected first-quarter profits thanks to increased sales of routers and switches -- a rare piece of good news that defied expectations of an industry-wide slowdown due to the general economic insecurity of Europe and a drop in U.S. federal spending.

The first-quarter earnings reports were the company's fourth straight quarter of earnings growth after the company’s weakened performance in 2011. Explaining the boon to its business, Cisco cited the growing need for stronger networks for mobile and cloud computing as more and more digital media and tech companies switch their focus to these areas.

Shares in Cisco rose steadily in Thursday trading, jumping nearly 2 percent to just over $18 in early afternoon trading.

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