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Cisco Bets $5B More on Video With NDS

Craig Matsumoto
LR Cable News Analysis
Craig Matsumoto
3/15/2012
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Cisco Systems Inc. (Nasdaq: CSCO) signed a deal to acquire video security company NDS Ltd. for roughly US$5 billion, the companies confirmed Thursday morning.

Based in Israel, NDS makes security and conditional-access software for video networks. To Cisco, that means a fresh approach to features such as video search and navigation.

NDS also offers a downloadable version of its encryption system, something that could help Cisco's set-top business (which the company still denies it's trying to sell).

Cisco expects to close the deal in the second half of 2012.

Why this matters
Cisco continues to bet its future on video. NDS gives the company a way to deepen relationships with the service providers that want to spread video to various consumer and mobile devices, according to a Thursday morning blog posting by Senior Vice President Marthin De Beer.

NDS also has some sizable customers in China and India, so the deal brings Cisco more deeply into those markets.

On a political note, Cisco has been not-so-subtly threatening that its acquisitions will favor overseas deals. It's a way of indirectly pressuring the U.S. government to offer a tax break on repatriation of international profits. You can bet Cisco is going to emphasize the fact that its largest acquisition in years happened overseas.

For more
More info on Cisco's video aspirations:



— Craig Matsumoto, Managing Editor, Light Reading

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craigleddy
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craigleddy,
User Rank: Blogger
12/5/2012 | 5:39:20 PM
re: Cisco Bets $5B More on Video With NDS


Two immediate reactions: 1. Holy s--t! I don't think anyone saw this coming. Anyone know the back story of how this came about? 


2. NDS was a leading opponent of the cable duopoly (Cisco and Moto), seeking to break it with its own conditional access and other solutions. However, NDS developers like working with the Cisco cable platform (formerly Scientific Atlanta) because it is more flexible for interactive apps and UIs than Moto's platform. What becomes of the cable duopoly now? Did the fox just buy the henhouse?             

Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:39:19 PM
re: Cisco Bets $5B More on Video With NDS


Oh, man. This definitely changes the game.  Lots of implications on the security side and well beyond them, as Mr. Tombes points out.  I'm getting my head around some of the bigger ones and will offer a list soon on my blog that you can poke holes at or expand on. JB

AESerm
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AESerm,
User Rank: Light Beer
12/5/2012 | 5:39:19 PM
re: Cisco Bets $5B More on Video With NDS


CA is a huge part of NDS, but there's more. At IBC, they offered up the 'blow you away' demo with Surfaces, a wall-sized exploitation of video display technology. (My colleague John Moulding was gaga in this write-up. Best demo in 13 years of IBC, etc.) But it could end up being a market-mover, like TelePresence, only multi-dimensional (3D, 4k, multi-screen, etc.). Must confess, though, my first unfair thought today was that the co-owners of NDS (News Corp) needed cash for mounting legal bills.

Flook
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Flook,
User Rank: Light Beer
12/5/2012 | 5:39:18 PM
re: Cisco Bets $5B More on Video With NDS


Would this be the second most expensive acquisition Cisco has ever made? I seem to recall that Scientific Atlanta was around $7 Billion.

Pete Baldwin
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Pete Baldwin,
User Rank: Light Beer
12/5/2012 | 5:39:17 PM
re: Cisco Bets $5B More on Video With NDS


Cerent was about $7B, IIRC.  The price was based on bubble-era Cisco stock, but that's the amount it took to keep Cerent from trying to go public.

Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:39:17 PM
re: Cisco Bets $5B More on Video With NDS


I believe you are right... No. 2, behind S-A, which Cisco bought for $6.9B in 2005, so you were right on the price. JB

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