Cisco and Splunk CEOs on $28B Deal, Markets' Post-Fed Pain, Murdoch Steps Down 9/21/23

SPEAKER_1 (0:00)

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SPEAKER_2 (0:02)

She's talking about a cake pop mural.

SPEAKER_3 (0:05)

Ah, exciting.

SPEAKER_2 (0:08)

Ooh, it's $8,000.

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SPEAKER_4 (0:15)

The three time stops.

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David Faber (0:31)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:37)

Good Thursday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. The post-fed stumble for equities continues this morning.

As the market comes to terms with higher for longer, jobless claims lowest since January, not helping tenure almost to four and a half. Our roadmap begins with big deal news this morning. Cisco acquiring cybersecurity firm Splunk, all cash worth 28 billion.

David Faber (1:01)

Plus the end of the Hollywood strike for writers may be near. We'll give you the latest reporting on that potential deal between the studios and the writers.

And the Fed is holding rates steady. Signaling it will keep rates though higher or longer.

Carl Quintanilla (1:17)

Let's begin with that deal of the day. Cisco agreeing to acquire Splunk for 28 billion, 157 a share in cash. Both companies cite what they call complementary capabilities in AI and security. Splunk's Gary Steele is going to be part of Cisco's executive leadership team, reporting to chair and CEO Chuck Robbins. And both gentlemen are going to join us exclusively at 915 this morning in about 15 minutes, Jim.

Jim Cramer (1:41)

Yeah, look, I think this is terrific to you. And I'll tell you why, because what Cisco's tried to do for a long time is have a lot of recurring revenue. And Splunk is nothing but recurring revenue. Cisco has tried to be a major factor in security, cybersecurity we know is incredibly important.

Splunk will give them the opportunity. They had a smaller division that does cybersecurity. It's not really been that much of a winner, frankly.

In the meantime, Gary Steele has taken this company. And David, you remember Starboard was agitating about Splunk. He came in, he fixed the company in what, 17 months, and then prepared to be able to sell it. That was not what he wanted to do. It was actually gonna come home made money. But he has done so much in a very short period of time that I think it makes tremendous sense for Cisco to strike right now.

David Faber (2:24)

We can ask the guys, but I mean, there was, you know, there were talks between these companies a year or two ago.

Jim Cramer (2:31)

Yes, there were.

David Faber (2:32)

Or some time back, and they didn't get a deal done then. I just wonder what changed. Well, obviously ask them, but do you have any sense?

Jim Cramer (2:37)

Well, look, I think that Gary Steele is the deal maker. He sold Proofpoint when he thought it was right for Tom Brava. He's a realist. They were doing terrifically. I think it was a company always for sale. You name the price. And you know what I think, Carl, but these guys, and they're gonna be on. These are the two of the most strange shooters I've ever met in business.

Gary's a man of few words, gotta be careful.

I always come to the 100 questions for Gary.

Carl Quintanilla (3:00)

Is that true?

Jim Cramer (3:00)

Yeah, because Gary says yes, no. You know, well, how do you think? It's as a new Microsoft Azure deal.

Good.

David Faber (3:07)

That's good to know, going into December.

Jim Cramer (3:08)

Yeah, got to know. And yeah, I have to say, I've loved them. I've loved them for a good Proofpoint when Proofpoint was doing badly and he would tell you. You know, Splunk was not, had totally lost his way.

I had a Splunk t-shirt and I just kind of, you know, put it aside. No dog named Splunk. But in the meantime, they've had this incredibly sticky group of customers and everybody swears by them. They have observability and they have terrific cyber security and they're on the edge, which is something Cisco has done. And I think we're going to hear an amazing story. And in the end, you're going to say, I want to buy Cisco because now they have the annual recurring revenue. That's basically subscription that is almost to 50%, which has been, which have been Chuck's go for a long time. And there are 46.7%. So we will enjoy, we enjoy meeting both of them together.