Network Computing is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Sheer Delight for Cisco

Having raised the hopes of nearly every privately held networking security vendor with its recent acquisition splurge in that sector, Cisco Systems Inc. (Nasdaq: CSCO) has turned its M&A attentions to OSS (see Cisco Nets NetSift for $30M, Cisco Buys Startup for $1.2M per Employee, and Cisco Chomps FineGround).

Today Cisco said it's buying network management specialist Sheer Networks Inc. for an initial sum of $97 million in cash and assumed options (see Cisco Buys Sheer Networks).

That sum could go up by a further $25 million if unspecified development and product milestones are met. Maybe Sheer, which peddles service fulfillment, fault management, and auto-discovery software tools for IP networks, will be given a target of 90 days to transform itself into a security company if it's to get the extra greenbacks (See Sheer Offers Triple Play OSS, Sheer Intros BOS for IP Networks, and Sheer Supports IP-VPN Services.)

So, Cisco could possibly pay $122 million for an OSS company with annual revenues "way less than $30 million," according to OSS Observer analyst Patrick Kelly. "That seems like a very high premium to me."

Kelly notes that Sheer "stumbled a few years ago and changed its top management, and his since won a couple of carrier deals." (See Ghez Who's Sheer's New CEO, Sheer Bags Telmex OSS Deal, and Korea Telecom Uses Sheer OSS.)

  • 1