Cisco Systems CSCO recently closed the acquisition of OpenDNS — a cloud-based security company — for $635 million.
OpenDNS will now be incorporated into Cisco's security business group under the leadership of senior vice president and general manager, David Goeckeler.
San Francisco-based OpenDNS offers cloud-based security solutions to both home and business users. The company’s services prevent computer attacks from particular Internet domains and encrypt web traffic to limit eavesdropping and other such threats. Its services are easy to deploy and integrate and cater to more than 65 million customers across 160 countries.
The buyout will add enhanced visibility and threat awareness of OpenDNS’ cloud platform to Cisco’s cloud security offerings. The purchase will help the network equipment maker to broaden its efforts and meet the changing compliance and security needs.
Subsequent to the closure, Cisco announced that Cisco AMP ThreatGrid has already been integrated with OpenDNS services. Therefore, AMP ThreatGrid customers will be able to block malware and identify critical security threats detected by ThreatGrid.
The acquisition comes at a time when the Internet security market is evolving rapidly and Cisco is aligning its long-term growth strategy to capitalize on the “Internet of Everything” trend. As cloud computing and various mobile devices gain popularity, the need for secure networks for data transfer and related services also increases. Additionally, enterprise IT teams are facing great challenges to detect threats from unmonitored and potentially unsecure entry points into the network, creating tremendous security risk.
Cisco aims to target this endeavor by offering integrated hardware/software/services solutions to counter security threats.
Cisco Systems is a leading provider of IP-based networking services and other products. For several years, the company has been expanding its security portfolio through in-house development and acquisitions. Some of its notable buyouts include Neohapsis, Virtuata, Sourcefire, Cognitive Security and ThreatGrid.
We believe that this acquisition will broaden Cisco’s customer base and security network services while offering a significant competitive edge.
Cisco currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Extreme Networks Inc. EXTR, Infinera Corporation INFN and Ixia XXIA. While Extreme Networks sports a Zacks Rank #1 (Strong Buy), Infinera and Ixia carry a Zacks Rank #2 (Buy).
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