The price is roughly $55 per share of BSFT stock, which is a 2% premium to last Friday's closing share price. The market day ended with the two companies enjoying a rise in their shares, with Broadsoft enjoying a 1.5% boost before the bell.
Analysts said the deal allows Cisco to further diversify away from its stagnating switches and routers business by giving it a stronger foothold in selling unified communications software to big telecommunications firms, according to CNBC. It also heralds the company's move from being a purely networking company to one that focuses on software and services delivered via the cloud. Cisco said in a statement that it will combine BroadSoft's open interface and standards-based cloud voice and contact center solutions delivered through service provider partners with Cisco meetings, hardware and services portfolio.
Broadsoft has over 500 customers globally, but among those customers are communication providers such as AT&T or Verizon, who then resell Broadsoft's service to millions and millions to their customers worldwide.
"BroadSoft's hosted offerings, sold through the service providers and aimed at small and medium businesses, are highly complementary to Cisco's on-premises and enterprise-centric HCS [hosted collaboration solution] offerings", Tessler said. Meanwhile, Cisco has been placing all its attention on high-growth sectors like cloud computing, the Internet of Things and security.
Before completion, Cisco and BroadSoft will continue to operate as separate companies. The company also makes software for call centers and team collaboration that workers can access online.
Although Cisco's over all revenue declined 4% in the most recent quarter from the year-earlier period, the company increased by 50% the portion of product deferred revenue related to recurring software and subscriptions. In May, Cisco agreed to purchase Viptela Inc., a software-based networking start-up, for $610 million. Cisco reportedly has plans to integrate Perspica's engineering team with the AppDynamics group.