LAS VEGAS -- Enterasys is closer to acquiring a company that it says will launch it towards $1 billion in revenue.

At the same time, Enterasys is formalizing a relationship with virtualization software company VMware and Dell to jointly tackle datacenter virtualization challenges. The campaign is expected to launch later this quarter or in the fall, said Trent Waterhouse, vice president of marketing, at the Interop 2008 conference.

As the economy heads toward a recession and the stock prices of network companies dip, the opportunity to pull the trigger on a deal increases, Waterhouse says. Waterhouse spends a considerable amount of time daily sizing up potential targets, he said, most recently those in wireless, WAN optimization, and switching and routing.

Enterasys in February said it is looking to acquire companies that will take it to the $1 billion plateau in annual revenue in order to be a more formidable competitor to Cisco in the enterprise. Privately held Enterasys' revenue is currently around $350 million.

Even though lower enterprise spending is helping to sag the stock price of its competitors and acquisition targets, Enterasys is feeling little impact, Waterhouse said. (Read a story about how the downturn of the U.S. economy is not impacting the high-tech companies.)

"We're not feeling it," he said, "but we're seeing it as an opportunity. We're seeing some pause and caution but we're not seeing projects canceled. They might take 30 days longer."

In addition to lowering the price of potential acquisition targets, the soured economy forces potential customers to consider alternative products and suppliers, Waterhouse said. To help entice them, Enterasys is formalizing an "unofficial" relationship with VMware to offer a joint datacenter virtualization design that includes Dell servers.

Dell has been selling Enterasys switches to education and government users for two years.

VMware will help Enterasys switches enforce security and network service policies for applications on virtualized servers that move around the datacenter.

"Security vulnerabilities open up as an application server is in transit," Waterhouse said. "One of our fundamental strengths…is tagging data as to where it came from."

Separately, Enterasys this week unveiled a Gigabit Ethernet workgroup switch with QoS, Power over Ethernet (PoE), redundant power supplies and role-based policies.