The $25 million stock deal, one of several recent acquisitions made by the networking solutions provider, gives Cisco a foothold in network-caching software. The software speeds up Internet content by localizing traffic patterns, using the network's intelligence to move frequently accessed content closer to the user.
"It's another area where Cisco is broadening its expertise," said Megan Graham Hackett, an analyst for
Standard & Poor's Equity
. She gives Cisco a buy rating; her firm doesn't do underwriting. "It's not that much of a gamble to see if it takes off. Network caching is very important. It's a niche technology that is important to the Internet's buildout."
In midmorning trading, Cisco's stock rose 1 7/8 to 68 3/8.
Both companies' boards have approved the deal, which is still contingent on approval from Tasmania's shareholders. Cisco, of San Jose, Calif., will exchange its stock for all outstanding shares, warrants and options of Tasmania. In connection with the purchase, Cisco will take a second-quarter charge of up to 1 cent a share for purchased in-process research and development expenses.
Tasmania's 16 employees will become part of a new Cisco business unit. Tasmania was founded earlier this year and is based in San Jose.