Search /
Docfinder:
Advanced search  |  Help  |  Site map
RESEARCH CENTERS
SITE RESOURCES
Click for Layer 8! No, really, click NOW!
Networking for Small Business
TODAY'S NEWS
Where's my gigabit Internet, anyway?
Enterprise who? Google says little about Apps, business cloud services in Q1 report
DDoS Attackers Change Techniques To Wallop Sites
Can we talk? Internet of Things vendors face a communications 'mess'
AMD's profitability streak ends at two quarters
Michaels says breach at its stores affected nearly 3M payment cards
Exclusive: Google's Project Loon tests move to LTE band in Nevada
H-1B loophole may help California utility offshore IT jobs
How a cyber cop patrols the underworld of e-commerce
For Red Hat, it's RHEL and then…?
Will the Internet of Things Become the Internet of Broken Things?
Kill switches coming to iPhone, Android, Windows devices in 2015
Israeli start-up, working with GE, out to detect Stuxnet-like attacks
Galaxy S5 deep-dive review: Long on hype, short on delivery
Google revenue jumps 19 percent but still disappoints
Windows XP's retirement turns into major security project for Chinese firm
Teen arrested in Heartbleed attack against Canadian tax site
Still deploying 11n Wi-Fi?  You might want to think again
Collaboration 2.0: Old meets new
9 Things You Need to Know Before You Store Data in the Cloud
Can Heartbleed be used in DDoS attacks?
Secure browsers offer alternatives to Chrome, IE and Firefox
Linksys WRT1900AC Wi-Fi router: Faster than anything we've tested
Heartbleed bug is irritating McAfee, Symantec, Kaspersky Lab
10 Hot Hadoop Startups to Watch
/

Cisco spends $7.4 billion on optical push

Today's breaking news
Send to a friendFeedback


Cisco today announced its entry into the optical transport business in a big way by plunking down $7.4 billion to acquire privately-held Cerent of Petaluma, Calif. and Monterey Networks of Richardson, Texas.

The $6.9 billion acquisition of Cerent is Cisco's largest ever, dwarfing the $4 billion Cisco paid for StrataCom in 1996. Cerent develops SONET transport products that combine add/drop multiplexing, digital cross-connect, time division multiplexing as well as packet and cell switching. The company has more than 100 service provider customers nationwide.

With these acquisitions, Cisco is entering the optical transport market, which is expected to be a $10 billion market in 2002, the company says citing data from various analysts. The Cerent and Monterey products will accelerate the migration of service provider networks from traditional circuit-based networks to cell and packet-based networks, Cisco says.

Cerent's 454 optical transport system is the first generation of transport equipment designed around the Internet, Cisco says. It is a single platform that allows service providers to offer data and traditional voice services without investing in legacy SONET equipment, the company says.

Using this technology, service providers can accommodate rapid changes in network traffic in a matter of minutes instead of days, Cisco says.

Monterey builds optical cross-connect technology that is used to increase network capacity at the core of an optical network. The company has no announced customers, Cisco says.

Monterey's technology gives service providers the ability to quickly add capacity at the core of the network, Cisco says. Combined with Cerent, Monterey gives Cisco a "complete" SONET infrastructure offering to help service providers' transition to packet-based multiservice networks, and eventually to optical transport networks based on dense wave division multiplexing, the company says.

Cisco plans to integrate dense wave division multiplexing (DWDM) with the Cerent and Monterey products, Cisco officials say. At that time, Cisco will have a DWDM solution for metropolitan networks but will still lack a long-haul offering based on DWDM.

Cisco's partnerships with DWDM transmission companies Ciena and Pirelli are not likely to change "in the near to midterm," company officials say.

Cerent was founded in 1997 and has 287 employees. Monterey was founded in 1997 and has 132 employees. Both companies will become business units within the Transport Group reporting to Kevin Kennedy, Cisco's senior vice president of the service provider line of business.

With these acquisitions, Cisco now has 900 employees focused on optical internetworking.

Under the terms of the Cerent agreement, 100 million shares of Cisco common stock will be exchanged for all outstanding shares, options and warrants of Cerent not currently owned by Cisco. Based upon Cisco's August 25 closing price of $68.625, the stock exchanged would have a value of approximately $6.9 billion. This acquisition will be accounted for as a pooling of interests and is expected to close in the first half of Cisco's fiscal year 2000.

Under the terms of the Monterey agreement, 7.3 million shares of Cisco common stock will be exchanged for all outstanding shares, options and warrants of Monterey not currently owned by Cisco. Based on Cisco's August 25 closing price of $68.625 the stock exchanged would have an aggregate value of approximately $500 million. In connection with the Monterey acquisition, Cisco expects a one-time charge against after-tax earnings of between 7 cents and 11 cents per share for purchased in-process research and development expenses in the first quarter of Cisco's fiscal year 2000.

Both acquisitions have been approved by each company's board of directors and are subject to various closing conditions including approval under the Hart-Scott-Rodino Antitrust Improvements Act.

RELATED LINKS

NWFusion offers more than 40 FREE technology-specific email newsletters in key network technology areas such as NSM, VPNs, Convergence, Security and more.
Click here to sign up!
New Event - WANs: Optimizing Your Network Now.
Hear from the experts about the innovations that are already starting to shake up the WAN world. Free Network World Technology Tour and Expo in Dallas, San Francisco, Washington DC, and New York.
Attend FREE
Your FREE Network World subscription will also include breaking news and information on wireless, storage, infrastructure, carriers and SPs, enterprise applications, videoconferencing, plus product reviews, technology insiders, management surveys and technology updates - GET IT NOW.