Cisco to buy WebEx

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Cisco said it plans to buy WebEx, a leading on-demand collaborative applications developer for approximately $3.2 billion, or approximately $2.9 billion net of WebEx's existing cash balance. The acquisition is expected to close in Q4 of Cisco's fiscal year 2007.

"As collaboration in the workplace becomes increasingly important, companies are looking for rich communications tools to help them work more effectively and efficiently," said Charles H. Giancarlo, chief development officer at Cisco. "The combination of Cisco and WebEx will deliver compelling solutions accelerating this next wave of business communications. Cisco believes the network is a platform for all forms of communications and collaboration, and WebEx's technology and services portfolio complement Cisco's leadership in the Unified Communications and collaboration market, while providing Cisco with a new and unique business model to expand its presence in the fast-growing SMB market," Giancarlo said.

For WebEx’s part, the company’s CEO Subrah S. Iyar stated that "Cisco and WebEx share a vision of web collaboration as a key to accelerating business processes and critical to durable competitive advantage." Iyar added that Cisco’s considerable corporate reach “will help us extend our core web collaboration applications and continue to broaden the services we offer through the WebEx Connect platform."

WebEx's service portfolio includes technologies and services that allow companies to engage in real-time and asynchronous data conferences over the internet as well as share web-based documents and workspaces that help improve productivity, performance and efficiency of workers in any size organization. WebEx's subscription-based services strategy has been key to its success, and Cisco plans to preserve this business model going forward.

Following the close of the transaction, WebEx will become a part of Cisco's Development Organization, though the company’s basic business model will be maintained. Plans are for Iyar to report directly to Giancarlo.