Cisco still on spending spree

The networking equipment giant opens its wallet once again, this time to acquire digital subscriber line technology from Dagaz Technologies.

2 min read
A new month, another acquisition for
Cisco Systems (CSCO).

The networking giant opened its wallet once again to acquire DSL (digital subscriber line) technology from Dagaz Technologies, a division of Integrated Network Corporation, for about $108 million in cash and $16.5 million worth of stock.

The transaction is expected to close next month, with Cisco taking a one-time charge of 8 to 11 cents a share in its fiscal 1998 first quarter.

The acquisition of Dagaz's technology continues a trend by Cisco to invest in or acquire a wide range of technologies that facilitate high-speed access to the Internet and use of applications over a network. The DSL technology is expected to become a popular one for providing fast access using the existing telephone system.

Cisco will inherit two Dagaz hardware product lines--the Thurisa and the Jera--that offer carriers and Internet service providers a box that can zip DSL-based traffic across an ATM (asynchronous transfer mode)-based network link and another that condenses a variety of network traffic into a single line.

A recent study by the Pelorus Group, a market researcher, predicts the DSL market will grow into a $1.5 billion business by 2001 in the United States and $2.9 billion worldwide.

The Dagaz acquisition is Cisco's fifth of the year. About a month ago the company spent nearly $200 million to acquire Ardent Communications, a voice, video, and data hardware firm, and the Global Internet Software Group, makers of Internet firewall software.

The company has now acquired 19 companies since 1993.

The $16.5 million in stock included in the offer will go toward a stock option plan at Dagaz. The 30 employees at Dagaz will continue to be based out of New Jersey, but will eventually be moved to Cisco's Chelmsford, Massachusetts, campus.