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November 29, 2012

Cisco Makes Third Announcement This Month about Acquisitions

By Ed Silverstein, TMCnet Contributor

November is the month for acquisitions at Cisco (News - Alert) Systems. This week, the company announced it will acquire Cariden Technologies for about $141 million in cash. The deal should be completed in Q2 of 2013.

The planned purchase follows two other acquisitions announced earlier this month. Cisco Systems (News - Alert) announced it will pay $125 million for Cloupia and $1.2 billion for Meraki, according to the Silicon Valley/San Jose Business Journal.

In addition, Wells Fargo (News - Alert) analyst Jess Lubert told Barron’s  the latest deal is Cisco’s ninth purchase of a software- or cloud-centric company in 2012.

“Cisco entered the January quarter with roughly $7.5 billion in U.S. cash, which along with strong cash generation appears more than sufficient to support the recent M&A activity as well as the dividend and share repurchase plans,” Lubert said.

Cariden Technologies offers design, network planning and traffic management solutions for telecommunications service providers. Cariden customers include Deutsche Telecom, SingTel, Swisscom and Verizon (News - Alert), All Things D reported.  Cariden has been a Cisco partner for some ten years and is a provider for more than 60 networks worldwide, TMCnet said.

"The Cariden acquisition reinforces Cisco's commitment to offering service providers the technologies they need to optimize and monetize their networks, and ultimately grow their businesses," Surya Panditi, senior vice president and general manager, Cisco's Service Provider Networking Group, said in a company statement. "Given the widespread convergence of IP and optical networks, Cariden's technology will help carriers more efficiently manage bandwidth, network traffic and intelligence.  This acquisition signals the next phase in Cisco's packet and optical convergence strategy and further strengthens our ability to lead this market transition in networking."

Analysts appear positive about the deal.

“We believe Cisco should … benefit from Cariden’s MPLS expertise, which is a dominant WAN technology that may help Cisco better compete as the routing and optical layers converge,” Lubert told Barron’s.

In addition, Brian Marshall, an analyst with ISI (News - Alert), told All Things D that Cisco is interested in software-defined networking (SDN.) “Cariden, it turns out, has done some fundamental work on the SDN, and over the summer announced a blueprint for doing SDN-based network infrastructure,” the report explained.

Cisco also selected Cariden because it has strong traction with leading service providers, Shailesh Shukla, vice president and general manager of Cisco’s Service Provider Networking Software and Applications Group, told TMCnet. 

Edited by Rich Steeves
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