Why Cisco Shouldn't Buy FireEye
Last Thursday, FireEye's (NASDAQ: FEYE) stock price jumped by more than 6% during trading hours on rumors Cisco Systems (NASDAQ: CSCO) would acquire the cybersecurity specialist. The companies didn't comment and the information remains uncertain. But independent of the outcome, investors should keep in mind such a transaction would not fit Cisco's strategy.
Acquiring cybersecurity vendors makes sense for Cisco. The tech giant posted declining revenue last Wednesday and cybersecurity represents a solid growth opportunity with an estimated compound annual growth rate (CAGR) of 14.5% through 2025, according to the research company Mordor Intelligence.
In fact, Cisco is already growing as a major cybersecurity player with $748 million of revenue during the last quarter, up 9% year over year. Compared to its total revenue of $12 billion, that segment doesn't look important. But cybersecurity has become a key element of the network infrastructures the company sells.
Source Fool.com
