Cisco has announced it has agreed to buy UK-based video software firm NDS. The Silicon Valley networking giant has said it will pay “approximately $5 billion”, including debt and retention-based incentives.
Cisco has made no secret of late of its intention to stay on the acquisition trail, despite a relative hiatus in its usually-prolific M&A activities over the past couple of years. It’s also not a huge surprise to see it acquiring outside the US, given its big overseas cash pile and vocal support for a tax-break for companies repatriating their cash to the US.
Meanwhile, service provider video has proved a significant growth area for Cisco (see Cisco stays on track with Q2 growth). So a further boost in this area appears a logical step, especially as NDS helps to open up pay TV markets like India and China for Cisco. It’ll need to stay fleet of feet to react to change in the video/TV market, nonetheless, given all the disruption occurring thanks to the blurring of the boundaries between web and broadcast content, not to mention the arrival (possibly this year) of Apple’s iTV.
We can expect Cisco to do more deals. It has the cash to do so, and it needs to boost areas like video in order to counteract the lower growth prospects in its switching and routing business. As ever, we hope Cisco will retain and invest in the UK assets and skills it is acquiring, including at NDS’s worldwide headquarters in Staines.