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Active Voice tops estimates; Cisco buys for $296 mln

Active Voice Corp. (Nasdaq: ACVC) on Friday unveiled an agreement to be bought, even as the company reported better-than-expected third quarter results.

Cisco Systems (Nasdaq: CSCO) agreed to buy Active Voice for $296 million in stock. Active Voice's software will enhance Cisco's IP-based voice technology by uniting text and voice, the companies said.

Shares in the provider of unified messaging and computer telephony software closed up 0.06 to 14.94 Thursday, ahead of the news. Cisco shares closed up 1.13 to 53.25.

The acquisition is part of Cisco's plan to deliver unified communications and a single, end-to-end Internet Protocol (IP) network combining data, voice, and video for the corporate enterprise.

Under the terms of the deal, Cisco will pay about $266 million in stock for the company's Voice's Unity operation comprised of IP-based unified messaging solutions. It will also pay a group of former Active Voice employees about $30 million in stock for Active Voice's circuit switched PBX voicemail technology.

The purchase price will be shared by all Active Voice security holders. As of November 9, 2000, there were about 14.8 million shares of Active Voice outstanding on a fully diluted basis. The acquisition will be accounted for as a purchase and is expected to be complete in the second quarter of Cisco's fiscal year 2001.

Cisco expects a one-time charge for purchased in-process research and development expenses, not to exceed 2 cents per share.

Active Voice also beat estimates in its second quarter Friday. Net loss was $2.4 million, or 22 per share, topping First Call's expected loss of 34 cents a share. It also showed improvement over a net loss of $4.3 million or 38 cents a share, for the quarter ended June 30.

Revenue for the quarter came in at $13.9 million, as compared to $11.3 million for the quarter ended June 30, 2000, representing an increase of 23 percent. They were down from 1999's second quarter revenue of $20.7 million.

"The increase in revenue from the immediately preceding quarter was due to a patent licensing agreement," said CSO Frank J. Costa in a release. "Additionally, we experienced increased demand for Unity messaging systems, offset by the decreased demand for the circuit switched telephone equipment," he added.

The decrease from the 1999's similar period was due to a technology upgrade program in place last year. Margins continue to increase due to licensing agreements and a higher sales mix of Unity and embedded software-only products, and we continue to be prudent with expenses, the company said.

The company also signed a recent agreement with Motorola, Inc. (NYSE: MOT) to deploy Unity Enterprise, its Windows NT-based, unified messaging communications server.