Cisco Systems to Buy San Jose, Calif., Maker of WiFi Gear
Posted on: Thursday, 13 January 2005, 00:00 CST
Jan. 13--Cisco Systems said Wednesday that it would buy Airespace, a San Jose maker of networking gear, for $450 million in stock in an effort to bolster sales of wireless equipment.
Privately held Airespace makes switches, access points and other products for wireless, or WiFi, Internet networks. Cisco, the leading seller of wireless networking gear, said the deal allows it to reach a broader range of customers.
"What we saw in Airespace was really just a tremendous breadth of capabilities," said Ned Hooper, vice president of corporate business development at Cisco.
Substantially all 175 Airespace employees are expected to join fellow San Jose company Cisco, Hooper said. The deal's price includes the cost of converting employees' Airespace stock options into Cisco options.
The acquisition is Cisco's largest since March 2003, when it agreed to pay $500 million in stock for Linksys Group, which sells networking gear for homes and small businesses.
The move comes as Cisco is trying to spur slowing growth of some of its "advanced technologies" -- business units Cisco is counting on to drive much of its sales. For its first fiscal quarter ending Oct. 30, Cisco said sales of its wireless business had fallen 2 percent from the previous quarter. In contrast, Linksys sales were up 20 percent.
"I think this is a recognition that they need to expand their capabilities in wireless technology," said David Willis, analyst with market research firm Meta Group. "They bought a company that was well-established and was already selling."
Airespace's gear has good technology for making phone calls over wireless networks and is relatively easy for customers to track and manage, Willis said. He added that the gear is also less expensive than Cisco equipment.
He said Airespace sells through Cisco rivals such as Nortel Networks and NEC -- providing, perhaps, an added bonus of taking away a "key ingredient" from the competition.
Airespace, founded in 2001, received about $58 million in venture funds from investors including Battery Ventures, Fidelity Ventures, Norwest Venture Partners and Storm Ventures.
The deal is expected to close in Cisco's third fiscal quarter ending April 30.
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CSCO,
Source: San Jose Mercury News
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