RealTime IT News

Procket's Ride Ends with Cisco


After toiling five years and amassing nearly $300 million in venture capital, Procket Networks sold its assets to the very company it tried to unseat.

Cisco will pay $89 million in cash for the Milpitas, Calif., company's intellectual property. In addition, members of Procket's engineering team will join Cisco when the deal closes early next year.

"[Procket] has a number of patents in progress, and we are buying the rights to those," Cisco spokesman Robert Barlow told internetnews.com. "We're buying the know-how, not [Procket's] current solution."

Approximately 120 engineers will join Cisco, Barlow said, as well as most of Procket's senior management, including Bill Lynch, co-founder and CTO, Jeffrey Purnell, vice president of hardware, and Stuart Monks, vice president of software.

The fact that several senior managers once worked at Cisco should ease the transition. A notable exception to the list is Procket President and CEO Roland Acra, who will serve as a consultant during the integration but will not stay with Cisco.

Procket (short for Packet Rocket) makes core routing hardware and software. It launched PRO/8000 Concurrent Services products last year to help carriers, corporations and government agencies manage Internet Protocol networks.

It claimed a technological edge over industry leaders Cisco and Juniper (Quote, Chart), saying its routers handled higher volumes of traffic, used less power and took up less space in data centers. The equipment was being used or tested at around two dozen installments, the most recent of which being the University of Oregon.

Cisco won't be selling the Procket router. However, until the deal closes, Procket customers can enter Cisco technology migration programs. Later, Cisco will tailor a specific program for Procket customers to convert to Cisco gear, Barlow said.

Procket was founded by industry veterans in 1999. As valuations for Internet and telecom startups jumped to astronomical levels, the company tallied $272 million in venture financing in three rounds from U.S. Venture Partners and others.

But the crash came as quickly as the run-up, and the company found itself developing products for would-be customers that weren't spending any money on network equipment upgrades.

In July, Randall J. Kruep, who had been with Procket since May 2001, resigned as president and CEO. Acra, formerly Cisco's senior vice president and service provider CTO, replaced him six months later.

Acra was optimistic about the company's technology edge and was looking to jumpstart sales and marketing in an improving market for telecom equipment. But apparently the pickup never gained momentum, and Procket began exploring a sale.

In other Cisco news, CEO John Chambers has said he's interested in partnering with Canadian telecom equipment maker Nortel . In response, Nortel CEO William Owens said his company is open to joint efforts.

A spokeswoman for Nortel, which is working through an accounting scandal that claimed it forced its previous CEO out, said no formal discussions have taken place with Cisco.

News of Cisco's overtures were viewed as a vote of confidence for Nortel, pushing its stock about 7 percent in late-day trading. Nortel also recently said it sees its sales