Cisco Makes Historic $28 Billion Acquisition, Market Reacts

Cisco Systems Inc. {{ m-tag option="price" ticker="CSCO.NE" currency="USD" }} has made a landmark move with its $28 billion acquisition of software analytics company Splunk, marking the largest deal in Cisco's history. This strategic shift has had immediate repercussions in the stock market. Cisco's stock experienced a 4% drop, closing at $53.24, while Splunk's stock soared by 21% to $144, albeit remaining below the $157 per share acquisition price.

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Cisco's Strategic Shift and Market Uncertainties

The acquisition is not merely an expansion of Cisco's product portfolio; it's a significant pivot aimed at increasing recurring revenue streams and focusing on subscription-based software and services. Despite the rise in Splunk's stock {{ m-tag option="price" ticker="SPLK" currency="USD" }}, the market is pricing in some level of uncertainty regarding the deal's completion, indicating that questions still remain.

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Analysts and Financial Markets Weigh In

Financial analysts have generally reacted positively to the acquisition, viewing it as a well-designed strategic move that aligns with Cisco's history in networking, security, and observability markets. The market reactions and analyst opinions collectively point to the deal's long-term strategic implications for both Cisco and Splunk.
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Conclusion

The $28 billion acquisition of Splunk by Cisco has created waves in both the tech industry and financial markets. While Cisco's stock took an immediate hit, the long-term strategy focuses on shifting towards software and recurring revenue. Analysts largely view this as a positive, calculated move for both companies.

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