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Cisco Says Andiamo!

Cisco Systems, Inc. put out the call Tuesday that the wheels are in motion to acquire privately held Andiamo Systems, Inc., a San Jose, Calif.-based maker of network data storage equipment.

In anticipation of explosive growth within the storage area network (SAN) market, which Gartner Group predicts will balloon from a $1.2 billion industry in 2002 to $4.3 billion in 2006, Cisco is moving full steam ahead to extend its data networking capabilities into the high-growth SAN switching arena, the company said. The acquisition will serve as an integral piece of the pie for Cisco's strategy.

Fledgling Andiamo is helmed by Buck Gee who will transition his 270 employees into the Cisco Storage Technology Group, once the acquisition is finalized. The company was founded in 2001 at which time Cisco entered an acquisition agreement with Andiamo to be exercised at a later date.

Since its inception, Andiamo has focused its product line on storage solutions that would eventually push Cisco further into the SAN market. Andiamo's products are designed for high-end storage applications for large data centers, while Cisco's IP storage products are targeted at midrange storage applications. The merging of the two companies will complement Cisco's lineup of networking products and enable Cisco customers to consolidate disparate storage networks into integrated SAN infrastructures.

By the fourth quarter of 2002, Cisco plans to market a complete lineup of storage switches developed by Andiamo. Cisco will also walk away from the acquisition with an experienced team of Andiamo software and hardware engineers.

"Cisco remains focused on its core market segments including switching and routing, and is focused on key new growth areas including IP Telephony, security, mobility and storage," said Dan Scheinman, senior vice president of corporate development.

"This acquisition supports Cisco's strategy to enter into new growth markets, such as storage networking, where we believe we have the potential to be the number one or two player," said John Chambers, president and CEO of Cisco Systems.

In the final stages of the acquisition, which is not expected to close until the third quarter of Cisco's 2004 fiscal year, shares of Cisco common stock will be exchanged for all outstanding shares and options of Andiamo not already owned by Cisco. The closing price is estimated to be in the $2 billion range, according to the company, depending on Andiamo's sales during the three months prior to the acquisition's closing.