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Cisco to Buy VoIP Firm

Cisco Systems is purchasing a consumer Voice over Internet protocol (VoIP) technology provider for its Linksys division, the company said today.

The networking equipment giant said it will spend about $68 million in cash and options for Sipura Technology. Both companies are based in San Jose, Calif.

The deal still needs regulatory and shareholder approval, but executives with both companies said they're confident the deal will close by the end of July 2005.

As soon as the acquisition is complete, Sipura will become part of Cisco's Linksys division, led by Senior Vice Presidents Janie and Victor Tsao.

"The acquisition of Sipura will augment Linksys' leading position in the rapidly growing VoIP market and is an example of Linksys' strategy to increase internal R&D capabilities in specific product categories," Charles Giancarlo, Cisco CTO and Cisco-Linksys President, said in a statement. "Adding Sipura's technology reinforces our commitment to developing products in the consumer voice space."

The choice to beef up Linksys' commercial VoIP capabilities is no mistake by Cisco. The company reported last month that its Linksys division had shipped over one million VoIP ports.

Market research firm Synergy Research Group is also bullish on home VoIP. Their analysts state there are close to eight million home users worldwide using VoIP to make phone calls over their broadband connections. By 2009, Synergy anticipates the number will grow to 58.9 million.

Founded in March 2003, Sipura makes both Analog Telephone Adapters and multi-line IP Phones like its SPA-841 for the consumer and SOHO (small office, home office) market. Sipura's technology is currently used by Linksys in some VoIP products, including some of its analog telephone adapters and its wired and wireless routers with phone ports.

Sipura also has contracts with about three dozen regional and top-tier partners, including broadband IP telephony service providers such as BroadVoice and Dialpad; VoIP infrastructure and equipment manufacturers like Nortel; VoIP equipment dealers and value added resellers, especially Nordic LAN & WAN and Allnet in Europe; and private-label original device manufacturers.

Cisco said its Linksys division would continue to work with those service providers, as well as use its traditional retail channels to target consumers and SOHO environments with Sipura's line of VoIP products.

The Sipura purchase follows a rash of acquisitions by Cisco in the last four months that started with Airespace and most recently Topspin.