Cisco to Acquire NetSolve for $128M

Cisco Systems has inked a deal to acquire remote
network management services provider NetSolve , the
company said Thursday.

The purchase, worth an estimated $128 million — or $11 per share for all
outstanding shares — would let San Jose, Calif.-based Cisco and its channel
partners offer real-time monitoring of Cisco products running advanced IP
services, such as Voice over IP and security.

Once the transaction is complete, NetSolve will eventually become a part
of Cisco’s Customer Advocacy Group. NetSolve President and CEO David Hood is
expected to stay on. He and his team will report to Cisco Senior Vice
President Wim Elfrink.

“As more businesses deploy secure converged networks with data, voice and
video applications, creating and maintaining a healthy network
infrastructure is essential to the successful deployment and operation of
IP-based technologies,” Elfrink said in a statement.

Austin, Texas-based NetSolve markets its offerings with the ProWatch
brand name. The company’s core services include the monitoring and
management of IP communications networks, security software and devices,
WANs and LANs. In addition, NetSolve offers a secure, Web-based portal to
give customers and partners real-time visibility of their IT infrastructure.
The company did not say whether ProWatch would continue as a separate
brand or if it would merge with Cisco’s CallManage product family.

NetSolve was founded in 1987, went public in 1999 and has 292 employees.
The company competes fiercely with systems integrator EDS
but has managed to eke out about 850 clients,
including several midsize and large U.S.-based corporations, as well as
services in 75 countries. Similar to Cisco, NetSolve sells directly to
customers, as well as through channel partners like AT&T .

In a show of support for those customers, Cisco said it will extend the
NetSolve services and technology to specialized channel partners via a
resale model, a wholesale ASP model or
its Advanced Technology Partner program.

“With the acquisition of NetSolve, Cisco gains an experienced team,
proven process and intellectual property, providing the foundation to cost-effectively
enable our channel partners to accelerate the adoption of remote
network and IT infrastructure management services,” Paul Mountford, a senior
vice president with Cisco Worldwide Channels, said in a statement. “This is
another important step in Cisco’s commitment to help grow our partners’
services practice revenue and overall profitability while adding value to
the secure, converged networks of our mutual customers.”

While the boards of both companies have given the green light to the
acquisition, the transaction is expected to close in the second quarter of
Cisco’s fiscal year 2005 pending shareholder and regulatory approval.

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