Cisco looking to Airespace?

Word on the street is that Cisco Systems is looking to buy a wireless switch start-up. The asking price could be as much as $500 million, according to the industry rumor mill.

For months, Silicon Valley wonks and Wall Streeters have been talking about Cisco buying Airespace, but rumors of the deal have heated up in recent days, with many folks now saying the deal is close to being finalized. The $400 million to $500 million price tag could be a nice prize for Airespace, which reportedly posted about $60 million in revenue for 2004.

Even though Cisco dominates with more than 50 percent market share, experts say Cisco's wireless LAN technologically is at least a year behind start-ups like Airespace and Aruba Wireless Networks. There are even rumblings that the company has lost some major accounts, because its offering wasn't up to snuff. Word has it that Airespace will probably win Microsoft bid to upgrade its wireless network. Cisco gear was used five years ago to build the first generation network.

An acquisition could jump-start Cisco's development and give the company an edge as it grows the wireless business. But others argue the price tag is too high for Airespace. For now, both Cisco and Airespace are keeping mum about any talks.