Virata jumps on Cisco deal

Virata Corp. (Nasdaq: VRTA) shares shot up over 25 percent in early trading Wednesday after the company announced a strategic alliance with Cisco Systems Inc. (Nasdaq: CSCO).

Virata provides communications software and semiconductors to manufacturers of broadband networking equipment. Its shares were up 4.88 to 24.25. Cisco rose 5.81 to 53.88.

Under the terms of the deal, Virata’s EmWeb server and software will be integrated into Cisco’s IOS software. The EmWeb web management technology was originally developed by Agranat Systems and was recently acquired by Virata.

The EmWeb Server software will also be included with Virata's broadband devices by the end of the year.

The announcement comes a week after shares in Virata plunged more than 40 percent, despite beating second quarter estimates (excluding charges), amid concerns that sales to its largest customer, Westell Technologies Inc. (Nasdaq: WSTL), were slowing.

UBS Warburg downgraded the stock, although Dain Rauscher Wessels and Kaufman Bros maintained “strong buy” ratings.

Virata is one of several DSL modem-related companies whose shares have been volatile of late on concerns about the market for high-speed modems.

Reuters contributed to this story.