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Cisco Buys Wireless Firm

Cisco Systems Inc. Tuesday acquired Aironet Wireless Communications for approximately $799 million in stock.

The acquisition of the leading developer of high-speed wireless local area network products furthers Cisco's (CSCO) strategy to deliver open standards-based wireless solutions to mobile business environments.

Each share, option and warrant of Aironet Wireless Communications (AIRO) will be converted to 0.637 shares of Cisco common stock. The figure is based on Cisco's Monday closing price of 75 5/16.

In connection with the acquisition, Cisco expects a one-time charge against after-tax earnings of between 3 cents and 8 cents per share for purchased in-process research and development expenses in the third quarter of fiscal 2000.

The acquisition will allow business customers to gain wireless capabilities that act as extensions to existing local area networks.

Wireless LANs are in-building local area networks (LANs) that communicate using radio technology and enable personal computer users to establish and maintain a wireless network connection anywhere throughout a building. Using LANS enable a person with a wireless-enabled PC to check e-mail, browse the Net and access network resources while roaming throughout a building or campus.

Aironet is the third wireless acquisition by Cisco recently. Last September it paid $157 million for Clarity Wireless Corp. and in June jointly bought Bosch Telecom with Motorola (MOT) to purchase Bosche Telecom. With the purchases, Cisco is moving to corner the wireless router market.

Aironet Wireless Communications has a customer base comprised of leading Fortune 500 companies, including Dell Computer Corp. (DELL), IBM Corp. (IBM) and Microsoft Corp. (MSFT).