CSCO Cisco Systems Inc

By Don Clark 

Cisco Systems Inc. said it will pay $1.4 billion in cash to buy Jasper Technologies Inc., one of the best-known startups pursuing the technology trend known as the Internet of Things.

The closely held company, founded in 2004, provides services to help customers connect and monitor things like cars, jet engines, manufacturing tools and medical pacemakers. Jasper specializes in managing the wireless connections and billing relationships with cellular carriers needed for what Silicon Valley calls IoT applications.

Cisco, the biggest maker of networking equipment, has long promoted the trend as the next major phase in the evolution of the Internet. It sells a variety of switching, routing and Wi-Fi equipment and related services and software.

The deal helps Cisco move "up the stack" of technology, becoming more closely involved in IoT applications in addition to moving data, said Rob Salvagno, Cisco's vice president of corporate development.

"We believe that together we are going to be able to move this industry forward a lot faster," he said.

Cisco, based in San Jose, Calif., has a long track record of acquiring smaller companies. But it has specialized in less costly deals in recent years; the Jasper purchase is Cisco's largest since it agreed to pay $2.7 billion for Sourcefire Inc. in July 2013.

Jasper, based in nearby Santa Clara, reached a private valuation of $1.4 billion as of April 2014. It raised $204 million in private financing.

The company was founded by Chief Executive Jahangir Mohammed before the term IoT had gained currency. One original motivations was his annoyance that he had to drive his car to service shops to have them see sensor data that could have been transmitted wirelessly, Mr. Mohammed has said.

The company went on to land customers such as General Motors Co., which uses it to monitor vehicles for maintenance purposes, said Gaurav Garg, a board member and early investor in Jasper who later founded Wing Venture Capital. "The service shops get to see what is going on before you take it in," he said.

Mr. Mohammed will lead a new IoT software business unit, which will report to Rowan Trollope, a Cisco senior vice president who also oversees Cisco collaboration technologies.

Jasper, with about 385 employees, has 3,500 customers in more than 100 countries, Mr. Salvagno said. One of its major competitors is Ericsson AB, a big Swedish maker of telecom equipment that in November announced a technology partnership with Cisco, noted Steve Hilton, an analyst with the IoT research firm MachNation.

Though Jasper hasn't disclosed financial results, Mr. Hilton estimated its revenue at about $300 million, assuming Cisco paid four to seven times that amount in the deal.

The Wall Street Journal reported in November 2014 that Jasper was working on an initial public offering for the following year.

Write to Don Clark at don.clark@wsj.com

(END) Dow Jones Newswires

February 03, 2016 19:11 ET (00:11 GMT)

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