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Cisco Systems Snags Net Silicon Provider

Cisco Systems Inc. Wednesday grabbed privately-held Growth Networks Inc. for $355 million in stock.

This acquisition will be accounted for as a pooling of interests and is expected to close in the fourth quarter of Cisco's fiscal year 2000. Growth Networks' 53 employees will join Cisco's public IP carrier systems group.

Growth Networks is a market leader in Internet switching fabrics, a new category of networking silicon that interconnects the input and output ports within high-end switches and routers. The purchase strengthens Cisco's (CSCO) New World strategy by expanding its ability to deliver faster networking infrastructures to service providers.

Because optical networking is snowballing in popularity, demand has risen for products that can route and switch traffic at higher rates and capacities. Cisco will now be a carrier of scalable switching fabric technology and systems expertise to enable the development of the next-generation of switches and routers.

This technology will help create a foundation for next-generation networks and will enable service providers to meet critical requirements such as scalability, flexibility, multi-service support and quality of service, the company said.

Growth Networks' technology complements the earlier acquisition of StratumOne Communications. Both companies provide Cisco extensive expertise in semiconductor design and silicon integration.

Last week, Cisco announced a 49 percent increase in earnings and a 53 percent increase in sales. Positive investor reaction to the news vaulted the networking firm past General Electric, making it the second-most-valuable company in the country.