To: Zoltan! who wrote (32334 ) 2/16/2000 5:38:00 PM From: Rusty Johnson Read Replies (2) | Respond to
Briefing.com on CSCO ... Cisco Systems (CSCO) 129 3/16 +1 3/16: The acquisition monster rolls on. This morning Cisco announced that it has agreed to acquire Growth Networks for $355 mln in CSCO stock. Growth Networks develops Internet switching fabrics which are critical in terabit switches and routers. Though Growth is not a direct fiber optic play, this acquisition, and indeed almost every acquisition that Cisco has made recently, is geared toward the fiber optic future of telecommunications. Cisco has scheduled a conference call tomorrow at noon ET to discuss its plans for the optical market. Though Cisco is the clear networking leader, it is not at the leading edge of the optical market, and many smaller players are proving successful at capturing business in this rapidly developing space. Juniper (JNPR), Nexabit (part of LU), and Avici (private) are winning business in the gigabit/terabit router space, which is what Cisco was trying to address with today's acquisition. Terabit routers are electrical rather than optical, but demand for this equipment is being driven by the exploding bandwidth of the fiber backbone. Other optical niches and Cisco's positioning are as follows. DWDM: Cisco recently purchased Pirelli's DWDM division, marking its entry into that space. Optical switching: Cisco acquired Monterey Networks last year to compete in this sector, but Sycamore Networks (SCMR) has an edge here. Metropolitan Area Network (MAN) access equipment: Cisco jumped ahead with its acquisition of Cerent last year. MAN core equipment: Cisco hasn't made any moves yet in this space, though one possible target is Optical Networks, a leading MAN equipment company in which Cisco has a stake. Long haul transport: another area in which Cisco has not yet acted -- Nortel (NT) recently acquired Qtera, which prompted speculation that Cisco would acquire Corvis, in which it has a stake, but nothing yet. CSCO shareholders should hope for guidance on how the company will address the long haul and MAN business specifically, and also some indication on progress with Monterey in the optical switching sector. Though there are still some gaps in Cisco's optical strategy, it would be foolish to doubt it's ability to fill these gaps. The key reason why Cisco will probably become the world's largest company this year (it is rapidly gaining on GE and MSFT) is that CEO John Chambers has proven himself to be the tech sector's most adept practitioner of the acquisition. - GJ briefing.com
