Cisco Jumps Aboard Procket Ship

Still vexed by the telco market, cash-flush Cisco (CSCO Quote) is resorting to a more muscular approach: If you can't beat them, buy them.

The San Jose, Calif., computer networking giant says it will pay $89 million in cash for the brain power at upstart router maker Procket. The deal involves the acquisition of intellectual property, some unspecified assets and the hiring of most of the engineers at the closely held Milpitas, Calif., tech shop. Cisco expects the deal to close by late summer or early fall.

Speculation about the deal had circulated widely in recent weeks. Cisco chief John Chambers had been quoted in several published reports saying he wasn't shopping for a new router and that he "could not be more comfortable with our routing strategy."

But industry observers say Thursday's deal shows that Cisco isn't comfortable with its routing performance, a notable admission for the longstanding industry leader. ...