Cisco shutters Cerent HQ in Petaluma, CA

Spent $6.9 billion on optical transport company in 1999

Cisco has closed the old Cerent headquarters in Petaluma, CA, effectively ceasing operations in that area. Cisco paid $6.9 billion for Cerent in 1999 -- Cisco's largest acquisition ever at the time -- to obtain its multiservice SONET/SDH optical transport platform, which Cisco calls the ONS 15454.

But Cisco has struggled in optical, more so than other major vendors in good times and in bad. In the second quarter, Cisco had 3.4% of the $1.5 billion multiservice SONET/SDH market, well down the list of vendors -- it trails Huawei, Alcatel-Lucent, ZTE, Fujitsu, Ericsson, ECI Telecom, NEC, Nortel, and Nokia Siemens, according to Dell'Oro Group.

Cisco's market share dropped from 6.3% in 2006 to 4.8% in 2008, according to Dell'Oro. The market in 2006 was $5.3 billion and $6.2 billion last year, meaning Cisco's revenue dropped even though the overall market grew.

The closure in Petaluma raises doubts about the longevity of the ONS 15454 platform and of Cisco's viability in optical overall. When asked if Cisco is exiting the ONS 15454 business or optical overall, a company spokesman replied, "No, we are not." 

At various times in the past five or so years, Cisco was rumored to have its optical operations on the block. The company continually denied that.

Through sale or not, optical could be out at Cisco. And Cerent a $7 billion bust.

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