Cisco to Buy Jasper in $1.4 Billion 'Things' Push -- 2nd Update
February 03 2016 - 7:26PM
Dow Jones News
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)
Copyright (c) 2016 Dow Jones & Company, Inc.
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