Cisco Forays Into Digital Video
Cisco to buy closely held V-Bits for $128 mln in stock
PALO ALTO, Calif., Nov. 11 (Reuters) - Cisco Systems Inc. (NasdaqNM:CSCO - news) on Thursday agreed to buy closely held V-Bits Inc. for $128 million in stock, the first move by the world's largest computer networking equipment maker into the digital video market that is sent over cable television networks.
Already, most people who subscribe to cable-tv now receive the channels in digital form, said Ammar Hanafi, director of business development for San Jose, Calif.-based Cisco. Digital transmission of cable-tv allows operators to broadcast commercials based on geography, broadcast specialized content and offer other enhanced services.
The 30 employees who work for V-Bits, which was founded in 1997 and is also based in San Jose, will now work for Cisco, Hanafi said. No layoffs are planned. The company doesn't yet have any revenue because it just sent its first products to cable operators in the last several months for testing.
``This brings into our a shop a whole set of expertise in digital video that we didn't have before,' Hanafi said in an interview. He added that the market for the devices, called digital video multiplexers, is now about $300 million annually and is growing at about 25 percent a year.
Eventually, Hanafi said video traffic as well as Internet traffic will be delivered to homes via the same datastream. Currently consumers who have a cable modem and cable-TV get those streams separately.
Cisco will account for the transaction as a pooling of interests and expects to close the deal by the end of its second fiscal quarter, which ends in January. Cisco stock rose 4-1/4 to a record 83-3/4 on the Nasdaq. |
