YAGO acquisition puts Cabletron in router market

Rochester, N.H.

Cabletron Systems, Inc. last week went back on the acquisition trail, snapping up start-up YAGO Systems, Inc.

The $213 million deal will give Cabletron much needed routing technology for enterprise and Internet service provider networks, analysts said.

YAGO is a Sunnyvale, Calif., maker of Gigabit Ethernet routing switches - devices that are super fast and can make intelligent decisions about where to send traffic based on application profiles.

Cabletron's interest in YAGO was a poorly kept secret. As far back as last September, Network World reported that Cabletron had acquired more than a 20% stake in the start-up and might consider an outright acquisition (NW, Sept. 15, 1997, page 1).

The YAGO acquisition met with more positive industry reaction than Cabletron's December announcement that it was buying Digital Equipment Corp.'s Network Product Business for $430 million in stock, cash and product credits.

"This is really key for Cabletron," said Esmeralda Silva, an analyst at International Data Corp., a Framingham, Mass. market research firm.

"It allows them to get into the service provider networks, and it gives them a high-end solution to compete against Cisco [Systems, Inc.], 3Com [Corp.] and Bay [Networks, Inc.]," she said.

YAGO's Multilayer Switching Router is capable of switching traffic - at Layers 2, 3 and 4 - at gigabit rates on all ports.

Layer 4 switching is a key feature of YAGO's MSR 8000 backbone switching router. The device extends beyond traditional router functionality by switching Layer 4 (transport layer) application flows, en-abling the MSR 8000 to make switch decisions based on the applications a business is using and the priorities it wants to assign to them.

But what Cabletron officials last week left unclear was how YAGO's technology will fit in with Cabletron's existing product line and SecureFast strategy. Cabletron has touted SecureFast as a way to flatten out the network by using the company's "route one, switch many" scheme. Cabletron CEO Don Reed, who promised more acquisitions this year, said his company will detail plans to integrate YAGO's technology into Cabletron's product portfolio next week at ComNet '98 in Washington, D.C. Cabletron plans to start shipping YAGO products by July.

YAGO's 50 employees will remain at the company's Sunnyvale location, working with Cabletron engineers on the integration of the two companies' product lines. No layoffs are foreseen at this time, according to Reed.

Senior Editor Robin Schreier Hohman and the IDG News Service contributed to this story.