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Cisco adds video-networking company to its picture

The networking leviathan agrees to buy Canada's PixStream for $369 million to further its efforts to deliver broadcast-quality video over high-speed networks.

In keeping with its goal of delivering video over high-speed networks, Cisco Systems today said it has agreed to buy privately held PixStream in a stock deal worth $369 million.

The acquisition of Waterloo, Ontario-based PixStream is part of the network-equipment giant's move to deliver broadcast-quality video over faster networks. PixStream, a 4-year-old company, provides the hardware and software that enables businesses to distribute and manage digital video across all types of broadband networks.

PixStream marks Cisco's 17th acquisition this year. Like rivals Lucent Technologies and Nortel Networks, Cisco has acquired companies in an effort to beef up its offerings to provide integrated data, voice and video networks.

Last quarter, which was Cisco's strongest in four years, the company completed the acquisitions of eight companies: Atlantech Technologies, JetCell, PentaCom, Qeyton Systems, Seagull Semiconductor, ArrowPoint Communications, InfoGear Technology and SightPath.

Earlier this month, Cisco added wireless to its lineup when it struck a $425 million stock deal to buy privately held IPmobile.

Under the terms of the PixStream deal, Cisco will swap approximately $369 million worth of its common stock for all outstanding shares and options of PixStream. The acquisition will be accounted for as a purchase and is expected to close in the first quarter of Cisco's fiscal year 2001. That quarter closes in October.

Cisco executives said the technology will help the company construct high-speed networks for the likes of AT&T and Comcast as those companies morph their systems to handle voice, video and data information.

"Now when PacBell or AT&T come calling (on consumers), they can sell all sorts of services to us," said Ammar Hanafi, vice president of business development for Cisco.

San Jose, Calif.-based Cisco said it expects a one-time charge related to the acquisition for research and development expenses, not to exceed 2 cents per share. The transaction has been approved by the board of each company and is subject to various closing conditions.

Upon the close of the deal, PixStream's 156 employees will report to Lou Santora, vice president and general manager of Cisco's service provider business.'s Ben Heskett contributed to this report.