Please ensure Javascript is enabled for purposes of website accessibility

Instant Analysis: Cisco Buys an Israeli Semiconductor Company for $320 Million

By Eric Volkman - Mar 7, 2016 at 5:03PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The networking giant will part with $320 million to acquire the somewhat-mysterious Leaba Semiconductor.

What happened?
IT networking hardware and services powerhouse Cisco Systems (CSCO -0.09%) is in the midst of an apparent shopping spree. In the latest in a series of purchases, the company said in an official blog post that it bought Leaba Semiconductor, an Israel-based start-up that manufactures chips for networking hardware.

IMAGE SOURCE: CISCO

The price is $320 million in cash, in addition to assumed equity awards and retention-based incentives.

In the blog post, Cisco said that its new asset "advances our innovation strategy, supports continued differentiation of Cisco products and delivers on our goal to provide best-in-class solutions for our customers."

Does it matter?
Leaba Semiconductor is a bit of a black box at the moment. Among the few pieces of information on its website is a quote that says since it's operating "in stealth mode, we can't say much about what we are developing." As its product(s) and value remain mysteries, it's hard to judge how much of an impact Leaba will have on Cisco's business.

What is apparent is that Cisco aims to grow through acquisitions. The Leaba news comes on the heels of another deal, for cloud solutions provider CliQr Technologies at a price of $260 million. And early last month, Cisco announced it would buy Jasper Technologies, maker of a cloud-based Internet of Things service platform, for a cool $1.4 billion.

These purchases also show that the company's collecting assets across at least several of its numerous business groups. This indicates a thoughtful, measured approach, rather than the raft of opportunistic purchasing it might seem at first glance. This isn't cheap, of course, but the company's got the dosh -- cash and short-term investments exceeded $60 billion at the end of January.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cisco Systems, Inc. Stock Quote
Cisco Systems, Inc.
CSCO
$42.60 (-0.09%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.