Cisco Systems Inc is buying Billerica, Massachusetts-based LightStream Corp as the basis for a ATM Enterprise Business Unit. It has signed an agreement to pay $120m for the company, which began life in October 1993 as a joint venture between Bolt Beranek & Newman Inc and UB Networks Inc (CI No 2,221); the two founders will get 83% and 17% of the $120m respectively. Cisco says it expects the agreement, which should close this month, to result in a one-off charge against net profits of between 20 and 25 cents per share in Cisco’s fiscal second quarter to cover write-off of in-process research and development. Cisco also announced a business agreement with Bolt Beranek which will see the two forming a strategic alliance to market Bolt Beranek’s Inte rnet services and Cisco’s products. Cisco says it wanted LightStream, which will remain at its headquarters and operate as a separate business unit, for its ‘enterprise-class’ Asynchronous Transfer Mode switch, the 2020. It differentiates this category from the ‘Workgroup-class’ Asynchronous switches it already provides, through the former’s ability to provide local switching, bandwidth allocation, management of the entire network, and value-added services such as routing, virtual local networks and circuit emulation. Cisco says LightStream initially approached it to discuss licensing its Internetwork Operating System, but as the discussions progressed, Cisco began to realise the synergy between the two companies: while LightStream had a first class data engine, it had neither the necessary software nor the marketing infrastructure to capitalise on it. Almost three-quarters of LightStream’s 90 staff are engineers. Since these are Cisco’s areas of expertise, and since it had no enterprise-class Asynchronous Mode switch of its own, Cisco said the realisation dawned that the best option was to buy the company. LightStream’s development projects with Tellabs Inc and NEC Corp (CI Nos 2,386, 2,463) will be unaffected by the deal, says Cisco. Through the strategic alliance, Cisco will market Bolt Beranek’s Internet service and product offerings to its customers. Bolt Beranek is also to provide Cisco with Internet access services, and will take over management of part of Cisco’s internal network.
