Under the terms of the buy, between 3.7 million and 4 million shares of Cisco common stock will be exchanged for all outstanding shares and options of NetSpeed. In connection with the purchase, the networking company expects a one-time charge against after-tax earnings of between 13 cents and 18 cents per share in the third quarter of 1998.
Also as part of the deal, Northern Telecom (NT) has agreed to transfer its equity position in NetSpeed to Cisco. Nortel and Cisco signed a letter of agreement that extends Nortel's existing OEM agreement with NetSpeed for distribution of Digital Subscriber Line (DSL)-related products.
NetSpeed markets DSL technology in North America and develops a product suite that provides high-speed Internet access and data transmission using existing copper phone lines.
The deal allows Cisco to expand its DSL product line by integrating NetSpeed's suite with customer premise equipment, central office products, and broadband remote access with its own DSL product.
NetSpeed's 140 employees will continue to work in Austin. Its CEO, John McHale, and his team will become part of Cisco's Network-to-User business unit.