Splunk Soars on Report Cisco Offering $20 Billion

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Splunk Soars on Report Cisco Offering $20 Billion

By Dhirendra Tripathi

Investing.com – Splunk stock (NASDAQ: SPLK ) surged 7.6% in premarket trading Monday on reports Cisco (NASDAQ: CSCO ) has offered to buy the software maker for more than $20 billion.

At the close on Friday, Splunk was valued at $18.18 billion. The bid was made recently but the companies aren’t currently in active talks, The Wall Street Journal said.

Splunk makes software used by companies’ information technology and security operations to monitor and analyze data.

Cisco has traditionally derived the bulk of its revenue from selling routers, switches and security services but is now trying to build a suite of applications to grow its software business. Sales of its conferencing platform Webex got a boost in the pandemic, competing with the likes of Microsoft's Teams and Zoom to grab a share of the booming market.  

At $15 billion, sales of software for the year ended July 31 accounted for over 30% of the total revenue. Subscription revenue rose 15% year-on-year.  

Splunk has been looking for a CEO ever since Doug Merritt quit in November after several quarters of disappointing results. He was at the helm for some six years. Chair Graham (NYSE: GHM ) Smith is currently interim CEO.

For the year ended January 31, Splunk has guided for annual revenue to be around $2.54 billion. The company will declare its numbers on March 2.

Splunk shares have lost more than a third of their value in the last year after riding the first half of the pandemic to new all-time highs.

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