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Cisco Buys Video Conferencing Tandberg For $3 billion

In a move aimed at increasing its dominance in the video conferencing and online collaboration market, Cisco has agreed to purchase Norway's Tandberg ASA for a price of $3 billion in cash.

Cisco, which incidentally is the largest manufacturer of networking equipment in the world, believes that purchasing Tandberg, which currently holds a significant share of global video conferencing market, fits into its long term growth strategy.

It is important to note that Cisco already sells a sophisticated range of "TelePresence Systems" which essentially aim at providing conference participants with a real life quality; in addition it also offers the popular WebEx online meeting software which is currently used by millions across the world.

Many analysts believe that as companies tend to cut down on travel costs, demand for video conferencing will grow and Cisco plans to position itself as the primary solution provider for all online collaboration needs.

The acquisition by Cisco is unlikely to significantly affect its balance sheet as it currently has a huge cash reserve of around $35 billion, much of which is with its subsidiaries outside the US.

Since its cash reserves outside the US cannot be brought back without paying a large tax penalty, Cisco will be increasingly using the same for strategic acquisitions.

Our Comments

Shares of Cisco fell yesterday although the prices went up in after hours trading. Cisco and Tandberg have a long running partnership and produced their first product back in 2005. Through a number of acquisitions, Tandberg has also managed to grab some interesting patents and technologies.

Related Links

Cisco offers $3bn for Tanberg, the video conferencing company (opens in new tab)

(Times Online)

Cisco to buy video conferencing company for $3B (opens in new tab)

(SanfranciscoBizjournals.com)

Cisco takes aim at the videoconferencing market (opens in new tab)

(Cbc.ca)

Cisco to purchase Tandberg for $3bn (opens in new tab)

(Ft.com)

Désiré has been musing and writing about technology during a career spanning four decades. He dabbled in website building and web hosting when DHTML and frames were en vogue and started writing about the impact of technology on society just before the start of the Y2K hysteria at the turn of the last millennium. Following an eight-year stint at ITProPortal.com where he discovered the joys of global tech-fests, Désiré now heads up TechRadar Pro. Previously he was a freelance technology journalist at Incisive Media, Breakthrough Publishing and Vnunet, and Business Magazine. He also launched and hosted the first Tech Radio Show on Radio Plus.