Splunk acquisition is 'a game-changer': Cisco CFO
Cisco (CSCO) has completed its $28 billion acquisition of Splunk (SPLK).
Cisco CFO Scott Herren called the deal a "game-changer," telling Yahoo Finance Live it will "build value" for both customers and shareholders.
Herren added: "In the world we live in today with both AI and digital transformation, what companies need to do is be able to deliver to different places, to devices, to people. We're uniquely positioned to not only do that with the breadth of our networking and security portfolio, but add Splunk to that, and no one's going to be able to actually pull that combination of resources together in the way that Cisco can."
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Angel Smith
Video Transcript
BRAD SMITH: Cisco has officially completed its $28 billion acquisition of Splunk. This comes after the company won approval from the European Commission, who said in a statement that the transaction would not raise competition concerns. Scott Herren, Cisco CFO, joins us now for more on the deal. Scott, great to see you live in living color in person here in Yahoo Finance's studio.
SCOTT HERREN: You too, Brad and Seana. It's nice to get a chance to meet you, absolutely.
BRAD SMITH: All right.
SCOTT HERREN: --so having us in today.
BRAD SMITH: The European Commission given the green light here. So what next and how immediately accretive do you see this deal being to the business?
SCOTT HERREN: Yeah. We talked a bit about that. So we made this announcement, if you recall, back in September and we've been in regulatory approval. This is a deal that's going to build a lot of value for our customers and for our shareholders, which is a great combination to get both of those. What we talked about then is outside of the cash that's required actually for the transaction itself. So we'll be cash flow accretive in its first year.
And then beyond that it'll be, of course, gross margin accretive and accretive to the bottom line from fiscal 26 on. So it's a very attractive deal for our customers, but it's also a very attractive deal for shareholders.
SEANA SMITH: Scott, the first line in this release saying that Cisco is now uniquely poised to power, protect, and advance the AI revolution here for customers. Talk to us just about how this will in the longer run change the view not only for investors but customers when it comes to Cisco and the real difference that this is going to make to Cisco's bottom line.
SCOTT HERREN: Yeah. If you think about the world we live in today with both AI and digital transformation, what companies need to do is be able to deliver to different places, to devices, to people, to data that they've got. And we're pretty uniquely positioned to not only do that with the networking, the breadth of our networking and security portfolio. But at Splunk to that, no one's going to be able to actually pull that combination of resources together in the way that Cisco can. I think it's a game changer for us.
BRAD SMITH: And so now as you think about the Cisco operations going forward and what a-- because we were speaking with a chief investment officer earlier who was reintroducing the R word for many people out there in recession. In a recession, would you expect the spending profile for some of your core, your biggest customers out there to materially change? How have you modeled that into the business too?
SCOTT HERREN: Yeah. The forces of that kind of the revolution around AI that I think has become much more tangible in the wake of the large language models in ChatGPT, which suddenly made AI very approachable, very real for people across the board. I think companies see that as well. Obviously there's no-- there's no AI without data, there's no data without a network, and there's no network without security. So I think it really positions us quite well to power both the rest of the digital transformation, but also this revolution in AI.
