Cisco acquires WebEx for $2.9 billion

UpdatedCisco Systems, the giant networking company best known for building Internet routers, has agreed to buy WebEx, the video conference company, for a net $2.9 billion in cash.

This is significant because it brings Cisco into yet another Internet application market, this time serving small and medium sized businesses. It continues a relentless string of acquisitions by the San Jose, Calif. company, which first became known in the 1990s for its acquisitive nature. The pace slowed down a few years ago, but it has resumed, focusing more than ever on the consumer market and other Internet properties that are driving Web traffic. Most notably, it has acquired Five Across, Reactivity and the assets of Tribe all in the last few weeks.

You’ll see headlines elsewhere of a $3.2 billion purchase price, which includes WebEx’s $300 million in existing cash balance.

WebEx has more than two million subscribers. Cisco said that WebEx will give customers of Cisco’s existing products a better tool for interactivity and collaboration. Cisco’s officials said social networking is a trend that is pervading all markets, not just consumer related Internet applications, but also in business software applications. We’re on the conference call. Will update as necessary.

Beside WebEx, which leads the Web conference market, there’s also Microsoft’s Live Meeting, and Citrix’s GoToMeeting, and a host of scrappy small fry, such as DimDim.

The deal is expected to close in the fourth quarter.

Here is the company’s statement.

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