Cisco to Pay $89M for Procket Assets

As anticipated, Cisco Systems Inc. today announced it will buy the key engineering staff and entire intellectual property portfolio of core router vendor Procket Networks Inc. in a cash deal worth $89 million (see Cisco Acquires Parts of Procket and Cisco/Procket Deal Imminent).

Cisco isn't providing any further detail at this point, but a spokesman notes that it "isn't going to buy the company lock, stock, and barrel. We won't acquire any products. We'll buy the IP and Procket's talented engineering team."

But Cisco isn't taking on all of Procket's engineers. The spokesman says there's no breakdown of who is or isn't joining Cisco's Routing Technology Group, which is managed by senior vice presidents Prem Jain and Mike Volpi.

There's also no further detail on what the "select assets" referred to in the news release are, though again the spokesman presses the point that these will not include any Procket products. He adds that Cisco will not assume any of Procket's liabilities.

In its official release, Cisco notes that the "purchase will add a rich intellectual property portfolio and a team of proven silicon and software architects to Cisco's industry-leading routing technology and products."Volpi is quoted as saying: "The addition of Procket's engineering team to Cisco offers a unique opportunity to accelerate development of silicon and software across Cisco's next generation routing portfolio. Procket has some of the world's foremost designers of sophisticated silicon, software, and network systems with an average of over 15 years of experience in their respective industries. Adding this talent to Cisco's world-class engineering team will help drive continued innovation in network infrastructure, and that is good news for our customers and the industry at large."

Cisco recently unveiled its own core router after years of stop-start development (see Cisco Unveils the HFR). It's no doubt worth $89 million to Cisco simply to take out a potential competitor.

The deal is subject to standard acquisition conditions and regulatory approval, and is expected to close in the first quarter, ending in October, of Cisco's 2005 financial year.

In pre-market trading this morning, Cisco share price was down by 30 cents, or 1.3 percent, to $23.58.

Ray Le Maistre, International Editor, Boardwatch0