Cisco Systems Inc. (CSCO), the biggest maker of networking equipment, agreed to acquire JouleX for $107 million, gaining software that helps companies manage power usage as mobile devices spur a surge in data traffic.
The transaction, which includes cash and retention-based incentives, is expected to close in the fiscal fourth quarter, San Jose, California-based Cisco said today in a statement.
Cisco Chief Executive Officer John Chambers is stepping up investments in data networks to help accommodate users who are increasingly relying on smartphones and tablets to watch video and surf the Web. Adding JouleX’s programs and services for managing energy-consumption over corporate networks will help Cisco diversify beyond hardware, where growth is slowing.
“They want to lessen their reliance on things that they can sell just one time, like hardware, and things where margins are going down, like hardware,” said Michael Genovese, an analyst at MKM Partners in Stamford, Connecticut. “They want to increase their reliance on things that they can charge customers on a recurring basis for, and this is right in line with that.”
Cisco’s shares rose 1 percent to $24.12 at the close in New York. The stock has gained 23 percent this year, compared with a 16 percent gain for the Standard & Poor’s 500 Index.
JouleX is the latest in a series of acquisitions Chambers has announced as he works to bolster the company’s core business of routers and switches for large companies and telecommunications carriers.
Last month, Cisco agreed to buy U.K. networking company Ubiquisys for about $310 million, gaining technology that helps wireless carriers provide better service to smartphone and tablet users. The transaction followed purchases in recent months of Intucell Ltd. for $475 million and Meraki Inc. for $1.2 billion.
In March of last year, Cisco agreed to buy NDS Group Ltd. for about $5 billion to tap demand for technologies that deliver and protect pay-TV content.
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