Cisco's back at the table

Cisco Systems returned to the dealer's table last week, playing a familiar hand that helped fuel the company's growth a few years back but which has been largely out of the game since late 2000.

Cisco did buy two small companies 10 months ago, its only acquisitions in 2001 after purchasing 23 companies in 2000.

Last week, Cisco acquired two more: Hammerhead Networks Inc. of Billerica, Mass., and Navarro Networks Inc. of Plano, Texas, for a combined value of US$258 million in stock. Hammerhead develops software designed to accelerate the delivery of multiple IP service features, such as billing, security and quality of service, without degrading network performance; Navarro develops Ethernet ASICs.

Cisco indicated in its 10-Q filing for the second quarter that it may buy these companies. Cisco held minority stakes in both companies, and they are the company's first of an expected eight to 12, small to midsize company acquisitions this year.

Hammerhead and Navarro will help bolster Cisco's IP and Ethernet aggregation offerings, the company says. Hammerhead's software will play in Cisco's portfolio of cable, broadband and leased-line products for IP aggregation, while Navarro's ASIC designs will aid Cisco's internal development of high-end ASICs for next-generation Ethernet switching platforms.

Both acquisitions are expected to close in the fourth quarter of Cisco's fiscal year 2002.

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