Cisco CEO's bold Splunk remarks on China, AI 'lead' and $4bn ARR

From why Cisco’s acquisition of Splunk will help put it at the forefront of AI to whether China needs to approve the $28bn deal, here are six big remarks from CEO Chuck Robbins.

‘We will not need China's approval'; Cisco is ‘not consolidating any industries'

"Look, there's not any overlap in our portfolios. So we're not consolidating any industries. I mean, these are complementary technologies," Robbins continued.

"And candidly, with all the cyber threats that our customers are facing today, this should be viewed as a very positive deal to provide better protection for customers in the United States and around the world. So hopefully, that will become very clear to everyone.

"We've had a lot of counsel that looked at it and believe that the nine- to 12-month window [of closing the deal] is probably accurate. We don't see a ton of product or market overlap here. While there will clearly be a regulatory review, we think we can get it through that nine to 12 month window.

"Oh, and by the way, just to clarify—we will not need China's approval," he concluded.

Background : Getting regulatory approval from China has caused issues, such as long delays, in the past when it comes to large acquisitions. For example, Broadcom is hitting speed bumps to get its $61 billion acquisition of VMware approved by China state regulators. Cisco's Splunk purchase has been approved by the boards of directors of both Cisco and Splunk. The deal is still subject to regulatory approval from various regions. Cisco wants the deal to close by third quarter 2024.

Cisco-Splunk product integration will begin on ‘day one'

Bullish on the prospects of the integration, Robbins explained: "I will tell you that from the beginning of our conversations on this, Cisco's security team is incredibly excited about the opportunity to work with Splunk. And the integration on the product side, we would intend to start that on day one.

Our observability teams were involved in this decision as well. Our teams are super excited.

"We have great new leadership in the security business unit. We've launched significant innovation this year. If you specifically think about the extended detection and response platform that we went general availability around 1 August, if you take that capability and you combine it with the SIM capability that Splunk brings—we believe that we really have the opportunity to predict and prevent threats in the future, particularly when we layer AI on top of on top of all the data."

Cisco CEO's bold Splunk remarks on China, AI 'lead' and $4bn ARR

From why Cisco’s acquisition of Splunk will help put it at the forefront of AI to whether China needs to approve the $28bn deal, here are six big remarks from CEO Chuck Robbins.

Splunk will add $4bn in ARR to Cisco

"This deal further strengthens our financial position and accelerates our business transformation. Upon closing, we would expect to add $4bn in ARR (annual recurring revenue)," Robbins said of the financials.

"In addition, we expect to drive more software sales, and overall TAM (total addressable market) acceleration and expansion.

"The combination also supports our commitment to driving long-term shareholder value creation. There is no change to our capital allocation strategy. We remain committed to maintaining a strong balance sheet, driving operating leverage, steadily increasing our dividend, and maintaining the current share buyback rate.

"I'm also excited about the strong cultural fit between our two organisations. They have incredibly talented teams. And we share deep rooted values around innovation, customer success, trust and transparency and inclusion. Both companies are regularly recognised as great places to work.

"Coming together with a shared vision and common beliefs will drive greater innovation for our customers and stronger growth."

Cisco CEO's bold Splunk remarks on China, AI 'lead' and $4bn ARR

From why Cisco’s acquisition of Splunk will help put it at the forefront of AI to whether China needs to approve the $28bn deal, here are six big remarks from CEO Chuck Robbins.

Why Splunk will be Cisco's largest purchase ever

"I've always said that we don't have a size limitation on how we think about M&A. We want a technology and strategic fit, we want valuation to be right, we want the cultural fit to be right and all of those things are true with Splunk," the CEO explained.

"We haven't done a big deal because we had never gained conviction on a big deal. And I can tell you that the work that [CEO] Gary [Steele] has done at Splunk in the last 18 months is exceptional.

"The progress they've made, the financial aspects of this deal, as well as the strategic fit and the cultural fit, provided our entire team conviction that this was a great thing for us to do. … The combination of Cisco and Splunk further enhances and accelerates our strategy to securely connect everything to make anything possible."