The Arrow Now Points To Cisco

  • Written By: G. Duhaime
  • Published On: June 6 2000



The Arrow Now Points To Cisco
G. Duhaime -June 6 , 2000

Event Summary

SAN JOSE, CA May 5, 2000-Cisco Systems, Inc. (NASDAQ:CSCO) announced the acquisition of ArrowPoint Communications, Inc. (NASDAQ:ARPT) of Acton, MA. ArrowPoint Communications is the leading provider in content switches that optimize the delivery of web content. The acquisition of ArrowPoint Communications in conjunction with Cisco's broad range of Internet products will enable ISP's to have a higher level of intelligence to provide to their high volume customers.

The terms of the agreement are based on a common stock exchange. Cisco will exchange 2.1218 shares of common stock for all outstanding shares and options of ArrowPoint Communication. The purchase price of this acquisition is approximately $5.7 billion [USD] with the value of Cisco stock at $63 5/8. This acquisition will be completed during Cisco's fourth quarter of 2000.

Market Impact

Cisco's acquisition of ArrowPoint Communications fills a void in Cisco's arsenal of Internet based products. ArrowPoint's content switching solution will enable Cisco customers to benefit from a feature packed piece of hardware and software. This feature set will enable Cisco to deliver an enhanced level of network services to direct traffic based on the content being requested.

This acquisition will provide Cisco with a strong and complete product line to offer providers in the up-and-coming Internet marketplace that contains the Application Service Providers (ASP) and Application Infrastructure Provider (AIP). The combination of these two vendors' product lines will enhance the abilities of the providers to direct traffic based on content thus improving performance and throughput for the end user.

User Recommendations

This is a big win for Cisco Systems. Cisco had been lagging behind the other Ethernet switch vendors in the area of content switching. With Cisco acquiring ArrowPoint Communications, a leading vendor in content switching market, Cisco will be able to integrate the newly acquired product line with their Catalyst multilayer switching family.

The Catalyst family will best be served by having ArrowPoint's software integrated into Cisco's IOS software. The integration between ArrowPoint's content based software and Cisco's IOS has a 60% chance to be completed by the fourth quarter of 2000. While software integration will take time, ArrowPoint's content switches will be available immediately. This integration will give Cisco customers a comprehensive software or hardware solution to meet their developing expectations for today and the future.

 
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