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Cisco to buy Arrowpoint for $5.7 billion

Cisco Systems Inc. (Nasdaq: CSCO) agreed Friday to snap up recently public ArrowPoint Communications Inc. (Nasdaq: ARPT) for about $5.7 billion.

Shares in ArrowPoint, a maker of switches to optimize content delivery, were down 1/2 to 134 5/16 Friday following the news. The stock took flight just recently in its March IPO.

Coupled with Cisco's Internet infrastructure, ArrowPoint's products will enable ISPs, Web hosting companies and other customers to create faster, more reliable content delivery. ArrowPoint's technology will also strengthen Cisco's presence in emerging markets that include ASPs (Application Service Provider), AIPs (Application Infrastructure Provider) and dot-com companies.

Arrowpoint is just the latest acquisition by Cisco, as it gobbles up networking companies to keep pace with competitors Lucent (NYSE: LU) and Nortel Networks (NYSE: NT). Cisco shares were up 1 7/8 to 65 1/2 Friday morning.

ArrowPoint's software and hardware-based architecture enable it to support content-aware features such as URL- and cookie-based switching. These features allow ArrowPoint to direct traffic based on information such as the content being requested and the frequency of the request.

Terms of the deal call for Cisco to exchange 2.1218 shares of its common stock for all outstanding shares of ArrowPoint. Based on the closing price of 63 5/8 on May 4, the deal is worth about $5.7 billion.

Arrowpoint had counted Cisco among its competitors, along with Alteon WebSystems (Nasdaq: ATON), F5 Networks (Nasdaq: FFIV) and Foundry Networks (Nadaq: FDRY) .

The acquisition will be accounted for as a pooling of interests and is expected to close in the fourth quarter of Cisco's fiscal 2000.