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Cisco Systems Acquires HyNEX

Cisco Systems, Inc. Monday acquired privately-held HyNEX, Ltd. of Shefayim, Israel for an estimated $127 million in common stock and cash.

The deal has already been approved by both companies' boards. Cisco also said it would take a one-time charge of a penny per share to pay for the deal. However, it did not specify the quarter in which the charge will be reflected.

HyNEX, a subsidiary of Elbit, Ltd. is an of intelligent access device developer whose products are used to design ATM networks. The deal marks another move by Cisco to accelerate its international deployment of voice and video hardware.

This is Cisco's fourth acquisition in Israel and underscores Cisco's growing global technology development strategy. HyNEX's products are optimized for international markets and will strengthen Cisco's global service provider solution by offering a migration path from traditional, circuit switch networks to open, packet-based networks.

According to Cahners In-Stat Group, the worldwide networking equipment market reached $10.8 billion in the first quarter showing a modest 3 percent increase from fourth quarter 1999 sales.

In-Stat's report indicated that Cisco maintained its number one market share ranking, followed by Nortel Networks, Inc. , 3Com Corp. and Lucent Technologies, Inc.

Although revenue growth in beginning of this year was outpaced by the 13 percent growth achieved in the final quarter of 1999, In-Stat attributed the sluggish sales performance as merely a seasonal downtrend.

Gemma Paulo, In-Stat voice and data research analyst said she believes the networking equipment market is positioned for more robust growth in 2000, and expects year-end total revenues to hit $50 billion.

"Although growth slowed in Q1 2000, the networking equipment market will pick up steam in the remaining quarters of 2000, fueled by enterprise backbone purchases and continued service provider network build out," Paulo said. "With the exception of high-end switches, LAN equipment markets are suffering from rapid price erosion. Top vendors have pushed into the lucrative WAN equipment markets, targeting service providers."

In-Stat noted that 3Com took a first quarter revenue hit due to its reorganization, but that the firm still led in the small business networking equipment market segment.

Although In-Stat indicated that Lucent is moving away from the enterprise market, the former offspring of AT&T Corp. Monday unleashed its aggressive multi-vendor Virtual Private Network Alliance aimed at providing resellers and enterprise customers its comprehensive integration, monitoring and administration services.

Lucent's VPNA is comprised of a multitude of sales channels through Alteon WebSystems, Inc. , RSA Security, Inc. , Sun Microsystems, Inc. , UUNET and other leading Internet industry firms.

Touting its unique program, Ron Silver, Lucent senior marketing manager said the alliance is a great place for ISPs and professional service vendors to come together and offer more simplified VPN choices.

"With the VPNA, customers now have a one-stop shop for buying all of their VPN infrastructure and application products plus a full suite of professional services and Internet access services," Silver said.