Cisco Buys 2 Firms for $369 Million

Cisco Systems Inc. Thursday gobbled up two companies — San Jose-based Vovida Networks and Richardson, Texas-based IPCell Technologies — for about $369 million in stock.

All year, Cisco has been ravenously pursuing companies that it thinks will help it extend its vision of a single, IP-based communications network.

Under the terms of the agreement, Cisco will exchange common stock worth a gross aggregate value of about $369 million for all outstanding shares and options of both privately-held companies combined. Cisco is no stranger to the two companies. It already holds a minority 20.5 percent interest in Vovida Networks and owns 17.2 percent of IPCell Technologies. Cisco said it would account for the acquisitions as a purchase and anticipates closing the transaction in the second quarter of its fiscal 2001. The company warned that it expects a one-time charge for purchased in-process research and development expenses but it should not exceed two cents per share. Both acquisitions have been approved by the boards of each company.

Vovida, which was founded in 1999 and has a staff of 65 employees, is a communications software provider and supplier of networking protocols. Its core product is the Vovida Open Communication Application Library (VOCAL), a SIP-centric, toll quality, carrier grade communications software which enables voice, video and data communications through broadband cable, DSL and wireless environments.

IPCell was founded in 1997 and has a staff of 110 employees. Its OptiCall Softswitch technology enables data and telecommunications providers to implement both voice and data services over IP or ATM networks.

Cisco said the acquisition of the two companies will decrease network costs and enable new revenue-producing applications for service providers by combining voice, video and data services over packet networks.

Cisco has been aggressively pursuing the grail of a combined voice, video and data IP-based network. Just last week it allied with NEC to push the use of Internet-based voice technologies within business organizations. At the end of August Cisco snagged Canadian PixStream, a company that specializes in delivering hardware and software solutions for distributing and managing digital video across broadband networks. Also in August, the company acquired wireless software maker IPMobile, intending to use its technology to bring about the convergence of data services and mobile wireless services. Cisco was also busy in July, snapping up storage area network company NuSpeed Internet Systems in order to create a solution for connecting SANs to IP networks. It also grabbed voice-over-IP device provider Komodo Technology Inc. in July.

Vovida’s employees will be led by Vovida Chief Executive Officer Alan Knitowski, who will report to the Voice and Video Business Unit led by Lou Santora, vice president and general manager, Voice and Video Services, Cisco’s Service Provider Line of Business. IPCell’s employees will be led by IPCell CEO Allen Adams, who will report to Todd Murray, vice president and general manager, Communications and Software and Networking Services Group, in the Service Provider Line of Business.