This week, online meeting platform SalesCrunch made an offer to buy WebEx from Cisco. What’s interesting about the offer is the fact that it offered Cisco $1 plus a 15 percent stake in the new company.
For a little background information, WebEx is actually the first online meeting platform to be successful. In 2007, Cisco bought WebEx for $3.2 billion in an effort to break into the collaboration space. However, last year, the company said it was making cuts and narrowing its focus to its core business.
Cisco did, in fact, lay off some employees and kill the digital camera company Flip. Also, earlier this year, it dropped Umi Home Telepresence, which had some people wondering if WebEx could be next.
As a result of these developments, SalesCrunch began thinking about an acquisition of WebEx. Sean Black, the CEO and Founder of SalesCrunch, told WebProNews that the companies had talked several months ago but had not reached a deal. Now, in light of the recent events, he thinks the company may be more open to his offer.
“They’re increasingly paying attention to their shareholders and getting back to what is their core business,” he said. “It’s been long questioned that WebEx fit to that core switches and routers’ business – that’s, I think, why the offer makes so much sense.”
Should Cisco sell WebEx for $1 and equity? What do you think?
Black told us that, although WebEx was successful in its prime, the software was very outdated for today’s expectations. In other words, SalesCrunch wants WebEx for its userbase.
According to Black, statements such as this from Morningstar analyst Grady Burkett help provide proof that Cisco should sell:
“What investors would like is to see them more focused on their core market, like routers, switches and data centers, and de-emphasize or even exit some of these consumer businesses.”
In a presentation he created that pitches the offer, Black also cites this statement from Michael Arrington, former founder and co-editor of TechCrunch, when he wrote about Cisco buying WebEx:
“Webex is still ubiquitous (I am asked to view a WebEx presentation almost daily), but it’s expensive and bulky. And if you aren’t on a newish Windows PC, there’s a good chance it isn’t going to work properly. WebEx is exactly the kind of a company that is being disrupted by new web startups, who are creating cheaper and better alternatives to older web applications.”
“[For Cisco,] the WebEx business just makes no sense at all,” said Black.
If Cisco does not accept his offer, he believes it will either kill the service or do nothing and allow it to continue to lose market share. He said both scenarios are bad since they could result in layoffs and, ultimately, a bad user experience.
On the other hand, Black believes a joint company would have a bright future. He told us that the users from WebEx combined with the modern browser-based platform from SalesCrunch that also integrates social networking, analysis, and other necessary elements would make a “really great next generation meeting platform.”
Although Black said he has received a lot of support for the offer, Colin Gillis, an analyst at BGC Partners, did raise some skepticism.
“Cash deals draw more serious attention, and this one is for $1. I don’t see them parting with WebEx anytime soon. The company’s clearly restructuring, but WebEx is not one that they have been telegraphing as up for sale.”
Black, however, remains confident that talks with Cisco will begin shortly.
Could SalesCrunch and WebEx provide a better service if they merged? Please comment.
Update: In a response to WebProNews, Cisco issued this statement:
“This is a cute publicity stunt from SalesCrunch, and we appreciate that they like our technology, but we have no intention of selling Webex.”