Cisco to snap up San specialist

Internetworking giant Cisco said it will acquire NuSpeed Internet Systems for about $450m in stock to provide its customers with a product that helps blend data and storage networks into one infrastructure.

The privately held startup, founded last year, will be incorporated into Cisco's enterprise business division.

Under the terms of the agreement, Cisco will exchange about $450m worth of its stock for NuSpeed's outstanding shares and options. Cisco said it would take a one-time write-off of three cents a share for purchased in-process research and development.

According to the network giant, the acquisition will enhance its storage area network (San) strategy by creating new applications for customers on IP networks. NuSpeed's technology, which ties Sans to internet-based networks, will be used to interconnect Sans with metropolitan, wide area and local area networks.

Sans are special-purpose networks that use data traffic switches to speed information between computer servers and the devices made by companies such as EMC, the number one manufacturer of corporate computer storage systems.

"NuSpeed supports Cisco's goal of helping companies link IP networks with Sans," said a Cisco spokesman. "Sans are increasingly important as commerce moves online and large amounts of data need to be stored, retrieved and transmitted over networks. It also complements our alliance with Brocade."

Last month Cisco said it would team up with Brocade to connect switches to form larger data-storage networks. Brocade is the largest manufacturer of switches that use the fibre channel standard.

Shaw Wu, an analyst at Bear, Stearns and Company, said: "Cisco is purchasing some more expertise to play in the San market more effectively."

The deal, approved by both companies' boards and accounted for as a purchase, is expected to be completed in the first quarter of fiscal 2001.

This is Cisco's fifteenth acquisition this year, and the networking giant has said that it will buy 20 to 25 more companies in 2000. The acquisition is also Cisco's second this week as it bought Komodo Technology for $175m in stock. Komodo develops voice over IP devices that enable analogue telephones to place calls over IP-based networks.