Cisco Buys ArrowPoint for $5.7 Billion

FRAMINGHAM (05/05/2000) - Analysts and users praised Cisco Systems Inc.'s move to buy Massachusetts-based high-end switchmaker ArrowPoint Communications Inc. for $5.7 billion.

The two companies announced the pact at a 9 a.m. (EDT) conference call that can be replayed until 8 a.m. (PDT) May 6, 2000.

ArrowPoint makes high-capacity switches that can be used to manage Web site performance with intelligent load-balancing features, sophisticated security and the ability to filter out problem traffic like spam, as well as to recognize important types of incoming content that should get a high priority for throughput.

AG Edwards analyst T. Peter Andrew said that the long-term prospects of the acquisition will work to Cisco's advantage.

"For the longer term I think this will bode very well," Andrew said.

Brean Murray analyst Gina H. Sockolow also said that she expects the purchase to help Cisco by giving it access to a technology that is higher-end than most of its existing products.

At least one major user of ArrowPoint switches, Toysmart.com of Waltham, Mass., was praising the deal as well.

"This is good from the point of view of ArrowPoint users," said John L.

Plunkett, chief information and technology officer at Toysmart.

Providing that ArrowPoint's agility is not lost, Plunkett said having Cisco's depth and breadth standing behind the product line will help development of the product. He predicted that with Cisco's funding, coverage and technical assistance, ArrowPoint will be able to scale "at a much faster rate."

In heavy morning trading, stocks for both companies went up sharply. ArrowPoint gained $4.25 a share to hit the 138 7/8 mark, while Cisco rose to $3.75 to 67 3/8 with more than 20 million shares being traded.

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