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AOL, Cisco in Ads-for-Routers Deal

After reporting the first quarterly loss in its history and seeing its stock price dip six percent Wednesday, Cisco Systems returned Thursday with upbeat news that it has expanded its technology and marketing relationships with Internet and media giant AOL Time Warner.

Meanwhile, AOL Time Warner, the world's largest ISP more than three times over (and that doesn't count its international subscribers, CompuServe subscribers or Gateway.net subscribers), is looking to double the capacity and coverage of its data network, and it plans to use Cisco's Internet routers to do it.

In return for Cisco's aid -- which will allow AOL to increase its network size and potential subscriber base -- the expanded relationship between the two companies also sweetens the pot for Cisco. Utilizing its newly expanded reach into the media world, AOL will allow Cisco to market its products and services across a range of traditional and interactive media properties including the AOL service, Fortune.com and Time Warner print and cable divisions.

"America Online is one of our most valued technology customers," said Keith Fox, vice president for marketing at Cisco. "With this agreement, we can better meet our range of advertising, sponsorship and marketing needs by expanding our online marketing programs across AOL Time Warner properties."

Still, Cisco is not AOL's only networking technology partner. The company expanded a similar agreement with Cisco competitor Foundry Networks in March.

Under that deal, Foundry agreed to provide AOL with networking products and services in exchange for advertising across AOL properties including the America Online service, Netscape.com, Time Inc. publications and on the Turner Broadcasting System.

"This agreement highlights the value and variety of marketing resources that AOL Time Warner can offer our partners," said Bob Pittman, co-chief operating officer of AOL Time Warner, on Thursday. "Cisco has been a leading partner for core IP technology for years, and their continued leadership and innovation helps us provide the best online and cable access to consumers everywhere."