Cisco Nears Airespace Acquisition, Sources Say

LONDON — Cisco Systems is rumored to be close to acquiring wireless LAN switch startup Airespace, with sources suggesting the deal may be struck at between $400 million and $450 million.

Word has been circulating for months that Cisco is keen to expand its WLAN offerings, including suggestions that the company has previously stalked Aruba Wireless.

A bid for Airespace is said to be well advanced and documents have been filed with the U.S. Justice Department, which handles antitrust reviews along with other agencies.

Neither Airespace nor Cisco returned calls seeking comment on the deal.

If the deal goes through, it would represent further consolidation of the WLAN switch sector, in which Airespace is one of the fastest growing and longest lasting of many startups. Several have either folded or acquired.Late last year, Siemens bought Chantry Networks. Both Legra Systems and AirFlow networks ceased operations. Subsequently, Fortress Technologies acquired Legra's security technology assets.

Craig Mathias, head of the Farpoint Group, said talk of the deal is coming from credible sources. "It makes a lot of sense for both, and may even be a win-win situation for the WLAN sector," he told EE Times.

"Cisco gets access to really good switch technology and it gives them another option in addition to the Catalyst 6500 networking switch as well as a more contemporary WLAN architecture," Mathias added. Cisco offers WLAN capability by linking a wireless LAN module to its Catalyst switch and upgrading the management software.

Mathias suggested the deal could be a potential problem for Alcatel and Nortel who relabel Airespace switches as part of the Wi-Fi offerings.

Despite Cisco's dominance of the WLAN space, helped by the acquisition last year of Linksys for about $500 million, many observers suggest its switch technology trails competitors like Airespace and Aruba.0