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Cisco Systems to Acquire Netiverse

Cisco Systems Inc. Friday took another step to satiate its hunger for content switch companies with the purchase of privately-held Netiverse Inc. for $210 million in stock.

Cisco currently holds a minority stake of 20 percent in Netiverse. The acquisition will be accounted for as a purchase and is expected to be completed in the first quarter of 2001.

In connection with the acquisition, Cisco expects a one-time write off of up to $.02 per share for purchased in-process research and development expenses.

Convinced that the key to success in the Net sector lies in networking, Netiverse is working to create a new content-aware technology that can accelerate content server functionality, firewalling, intrusion detection, content routing and server load balancing.

Friday's play strengthens Cisco's content networking solutions by offering its customers added performance capabilities for meeting the growing demands of distributing Web content and managing large amounts of Internet traffic. Netiverse's technology was developed specifically for use across multiple product lines and will be integrated into Cisco's existing content networking solutions.

The 34 employees will be led by Netiverse Chief Executive Officer Gururaj Singh and will join the Workgroup Business Unit in Cisco's enterprise line led by Senior Vice President James Richardson.

Netiverse is funded by Sequoia Venture Capital, the company that backed Cisco, Network Appliance, RedBack, Stratacom and others.

"Netiverse represents the future of content-aware switching", says Michael Goguen, Partner, Sequoia Venture Capital. "The proven background of the team and their laser-sharp focus made it a no-brainer to invest in them."

For Cisco, the move marks a logical addition to its portfolio, which the firm believes will reinforce its hold as a top network provider specializing in switches and optical networking.

The deal also signals the return of Cisco's business dealing in the U.S.

Last Friday, the company teamed with investors to purchase 80 percent of Italtel, Telecom Italia's computer network equipment unit, for $765 million. Cisco's cut was 19 percent. The two companies plan to provide broadband integrated data, voice and video services for fixed-line and mobile phone network services.

Earlier in June, the titan bought HyNex, a unit of Israel's Elbit, for $127 million in cash and stock to add products for international customers.