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To: Gary Korn who wrote (38704)	3/10/1998 6:08:00 PM
From: Glenn D. Rudolph	Respond to of 61433

Cisco Buys NetSpeed for $236 Million Newsbytes - March 10, 1998 14:54 %BUSINESS %SFO CSCO V%NEWSBYTES P%NBYT SAN JOSE, CALIFORNIA, U.S.A., 1998 MAR 10 (NB) -- By Craig Menefee, Newsbytes. Computer-networking giant Cisco Systems, Inc. [NASDAQ:CSCO] is buying NetSpeed Inc. of Austin, Texas, the firms announced Tuesday. The purchase, using 3.7 to 4.0 million shares of Cisco common stock, is valued at about $236 million. The price is based on Cisco stock's closing price of about $61 on Monday, the day before the announcement. Cisco Vice President of Business Development Mike Volpi, asked how the acquisition fits into Cisco's business strategy, told Newsbytes, "With the addition of this product suite, we can provide our customers with a complete end-to-end solution" for digital subscriber line (DSL) data delivery. By "customers," Volpi means US regional Bell operating companies, or RBOCs, and other telephone companies. Faced with challenges from high-speed cable modems, satellite-based downloading from DSS and other small-dish firms and high-speed digital content delivery piggybacked onto TV broadcast signals by WavePhore, the RBOCs are scrambling to keep all those consumer data lines active. Cisco wants to help. DSL has been touted as the RBOC answer to other high-speed data access methods. It can deliver data over standard phone lines at speeds 50 to 100 times faster than a 56 kilobit per second (Kbps) analog modem. DSL is also considered a key to such high-bandwidth applications as telecommuting, telemedicine and distance learning. NetSpeed's products give Cisco's RBOC customers access to a fully developed DSL product line designed to make it easy and affordable for smaller customers to hook into a DSL line. "Just to give you an idea, NetSpeed has two main products," Volpi explained. "One is a consumer device that sits next to your computer or plugs directly into a PCI slot, just like a modem. It costs $199 and is called a PCI Runner." He told Newsbytes Cisco may rename the consumer device at some point. "That's on the consumer or small office side," Volpi continued. "At the phone company side, it connects into a central office device that connects lots of incoming lines into a big box called Loop Runner, that acts as an aggregator." Volpi said both products will now be resold by Cisco to its "customer base," again meaning the RBOCs, to be rebranded and sold or leased to customers. "Eventually," added Volpi, "the PCI Runner may move into retail channels, as the DSL technology gets more widespread. I expect that will happen in one to two years." He declined to say which RBOCs have current DSL deployment plans involving Cisco, but did say every major phone company in the US has either launched DSL or is testing it for launch "very soon." The NetSpeed acquisition will result in a one-time charge against Cisco's after-tax earnings of between $.13 and $.18 per share in the third quarter of fiscal 1998, Cisco said. It will be counted as purchased in-process research and development expenses. Cisco said it expects to complete the NetSpeed acquisition by April, subject to various closing conditions including US government antitrust approvals. Reported by Newsbytes News Network: newsbytes.com . (19980310/Press & Reader Contact: Stacey O'Hara, Cisco, 408-527-9365, E-mail sohara@cisco.com; or Charlene Rogers, NetSpeed, 512-249-3101, E-mail crogers@netspeed.com /CISCO/PHOTO)