Cisco buys ArrowPoint for $5.7 billion

ITworld.com |  Networking

Cisco Systems, of San Jose, Calif., said it plans to acquire ArrowPoint
Communications, of Acton, Mass., a supplier of intelligent switches that speed up the
delivery of Web content. The planned purchase will be an all-stock deal valued at $5.7
billion.

ArrowPoint only recently went public. The company's so-called smart
switching
or intelligent switching technology focuses on layer 7
switching that is much closer to applications and content than the traditional router
technology that Cisco used to build its empire. Cisco representatives say that content-
switching technology has become increasingly important in the marketplace. Cisco values
ArrowPoint highly because its systems can look into packet flows and switch traffic
based on various content characteristics.

The $5.7 billion value of the transaction is based on the $63.63 closing price of
Cisco's shares Thursday.

"The combination of Cisco and ArrowPoint will be a very great powerhouse in this
field," said Paul Strauss, senior research analyst at International Data Corporation,
of Framingham, Mass. He said the deal would have significant impact on the market and
the competition.

"This could mean a tremendous upsurge in highly intelligent switch sales to service
providers," said Strauss. "It validates the market.

"Cisco was lagging technically in this area," said Strauss, who noted that
ArrowPoint had put together an able management team, and had made recent advances in
firmware development for intelligent switching.

The acquisition is expected to close in the fourth quarter of Cisco's fiscal
2000.

ArrowPoint's products, in combination with Cisco's Internet infrastructure
offerings, will be aimed at ISPs, Web hosting companies, and others, with the goal of
improving the user experience of surfing the Web, the company said. Cisco added that
ArrowPoint's software features also can be integrated into its existing products.

In addition, Cisco hopes that ArrowPoint's products will help to strengthen the
company's reach into markets ranging from ASPs (application service providers) and AIPs
(application infrastructure providers) to dot-com companies.

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