Cisco Muscles Out the Video Sector

NEW YORK (TheStreet) -- Cisco (CSCO) executives like to say video is the killer app on computer networks, but after the tech giant picked off another rival, other competitors are feeling a different kind of mortality.

Using $3 billion of the $29.1 billion cash pile that Cisco has stashed overseas, the networking equipment shop's bid for Norway's Tandberg continues its path to video-conferencing domination.

The news of Cisco's tie-up with the No. 1 video-conferencing player Tandberg effectively crushed the smaller players in the sector like Radvision (RVSN), and it threatens to put some distance on the No. 2 player Polycom (PLCM).

Cisco expects it will get regulatory approval for the Tandberg deal by the first half of next year.

The move comes less than three years after Cisco paid $3.2 billion for WebEx, a so-called collaborative conferencing system that allows subscribers to connect over the Internet on Web cams.

Two of the four acquisitions Cisco announced this year were video shops. In March, Cisco announced a $590 million all-stock deal for Pure Digital, which makes the Flip video camera. Last year, three of the five acquisitions were video-related, including Jabber and PostPath, two software shops that feature video-messaging applications. Cisco also bought DiviTech, a video management outfit. The biggest move in video for Cisco was its $6.9 billion takeover of cable TV gearmaker Scientific-Atlanta.

Cisco's aim is to supply the video systems that link teams of business users in disparate offices. The ultimate goal in this virtual meeting push is an effort called Telepresence, a pet project of CEO John Chambers. Telepresence is a service sold by Cisco and telcos including AT&T (T) that use banks of high-definition TVs that approximate a conference room setting.

Radvision shares fell 31% and office conferencing rival Polycom rose 1% by late morning Thursday.

--Written by Scott Moritz in New York

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