Cisco Systems Inc’s agreement to pay $4,000m in shares for StrataCom Inc is des-cribed by the Cisco as the biggest acquisition made in the history of Silicon Valley. It claims the acquisition will enable it to offer complete end-to-end networking solutions – from backbone network to desktop, developing an architecture which would relieve network congestion, adding: We will be able to combine Cisco’s routing technology with the switching capabilities of Strata-Com to provide something which will give us a higher-bandwidth architecture for service providers. The two have little product overlap, other than in the area of Asynchronous Transfer Mode. StrataCom brings Cisco new ATM products and a strong presence in the international carrier market, which Michael Davies, director of equity research at Utendahl Capital Partners reckons it needs. Cisco requires new entry into growth markets to sustain its impressive track record, as its traditional router business will eventually be eclipsed by growth in ATM switches, he said. The router business provides Cisco with some of its high gross margins because of the software-intensive nature of routers; as the router business slows, the Asynchronous Transfer market will offer new avenues of growth. Cisco said there are no planned lay-offs and refused to discuss product plans.
