Nokia Oy has snapped up Ipsilon Networking Inc, the privately held start-up credited with inventing IP switching, a technology that enables high-speed IP routing over ATM switching networks. The Finnish telecoms company will pay around $120m for the Sunnyvale, California-based Ipsilon – $100m in cash and the rest in Nokia shares. The deal signals the increasing importance of datacoms to many telecoms vendors as well as what could be the start of an acquisition trail for Nokia as the mobile telecoms company looks to beef up its datacom offerings. Wireless and data communications are clearly the key drivers as telecommunications markets become more open and increasingly global, said Matti Alahuhta, president of Nokia Telecommunications. Nokia is the ninth largest telecoms equipment vendor with $7.6bn in annual sales. Currently, 70% of its turnover is from cellular telephony equipment, and only 30% from telecoms and datacoms switching equipment. Nokia launched its datacoms efforts two years ago and Ipsilon’s technology a good fit for Nokia’s own ATM-oriented development efforts in the public network infrastructure market. In addition, Ipsilon has already signed an agreement with IBM Corp, 3Com Corp and Ascend Communications to bring together all their respective flavors of IP over ATM switching. Nokia says it will fold Ipsilon, which has more than 100 employees, into its Nokia Telecommunications unit, the infrastructure arm of Nokia. Nokia, already a dominant player in the global mobile communications market, says the deal will expand Ipsilon’s global distribution reach adding greater presence in Europe and Asia Pacific. Nokia had already bought a small equity stake in privately held Ipsilon in June (NBD 10/08/97). Finally, the deal is not such good news for Cabletron Systems Inc who paid $20m for a 5% stake in Ipsilon in April (NWB 04/13/97). The Nokia deal now values that stake at just $6m.
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