Cisco Joins Conferencing Battle

Network equipment giant Cisco will acquire conferencing specialist Latitude Communications for $80 million in cash, bolstering its Internet protocol offerings for large corporations and applying new pressure on Microsoft and WebEx in a growing sector.

Latitude’s MeetingPlace software combines voice, video and Web content. And since it’s standards-based, it integrates with scheduling applications such as IBM/Lotus Notes and Microsoft Outlook, as well as data collaboration and instant messaging tools.

It also can be used with Cisco’s CallManager, enabling users to schedule, attend and manage meetings via Cisco’s IP phones, a Cisco executive said. The company has sold more than 2 million IP mobile phones and this acquisition could help differentiate the offering further.

Santa Clara, Calif.-based Latitude will be part of Cisco’s Voice Technology Group and its products will be sold under the Cisco brand and through Cisco sales channels.

Elizabeth McNichols, a Cisco spokeswoman, told that the deal is expected to close within 90 days. Integration plans for Latitude’s 183 employees will not be complete until then, she said.

While Cisco examines ways to tie MeetingPlace into its offerings, Latitude has made some recent steps of its own toward integrating the product into related technologies. In August, the firm struck a deal with FaceTime Communications, an instant messaging management gateway vendor, that sought to create an MeetingPlace add-on enabling users to launch Webcollaboration, document sharing and voice conferencing from IM sessions.

Slated to be launched later this quarter as the MeetingPlace IM Gateway, the add-on would provide these capabilities to business workers using the major public IM networks — such as AOL Instant Messenger, Yahoo! Messenger, and MSN Messenger — or enterprise IM solutions like Lotus Instant Messaging, Microsoft Exchange Messaging and Live Communications Server.

Latitude was founded in 1993 and had revenues of $26 million during the first nine months of the year. That’s miniscule compared to Cisco’s multi-billion-dollar balance sheet, but it’s a market Cisco views as promising as companies switch to “on-network” conferencing to save money and improve security.

Analysts in the telecommunications groups at both SG Cowen and Deutsche Bank (DB) said Cisco paid a fair price for Latitute, given earlier acquisitions.

DB noted that in addition to the conferencing technology, Latitude brings with it 440 enterprise customers in finance, government, health care, education and transportation sectors.

Cisco’s entry adds a new player to an industry that is starting to gain traction, thanks to the popularity of broadband connections. Last year, Microsoft made another run at the sector with its purchase of PlaceWare.

The Redmond, Wash., giant recently released a new version of LiveMeeting with the Office 2003 package. “Microsoft’s desktop franchise provides a big competitive advantage through integration with Office and Outlook,” SG Cowen analysts said.

Cisco’s arrival on the scene is likely a negative for WebEx, the San Jose, Calif., company that controls about 65 percent of the Web conferencing market, SG Cowen analysts said.

The Latitude pickup comes a week after Cisco released solid first-quarter earnings. During a conference call with anlaysts, CEO John Chambers said the company would continue to scout for acquisitions, although they would be much smaller than the billion-dollar-blockbusters the company was known for in the late 1990s.

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