Shares in

Cisco Systems

, one of the world's largest makers of computer equipment for the Internet, surged Friday on news it would buy

ArrowPoint Communications

, a smaller competitor, for $5.7 billion in stock.

The deal is the second-largest acquisition ever for Cisco, which has been rapidly expanding through acquisitions over the past year. Cisco's biggest acquisition was its $6.9 billion purchase of the

Cerent Corp

.

Shares of Cisco

(CSCO) - Get Report

jumped 3 9/16, or 6%, to 67 3/16 in afternoon trading, while those of ArrowPoint

(ARPT)

rose 3 13/16, or 3%, to 138 7/8. (Cisco finished up 4 1/8, or 6%, at 67 3/4, while ArrowPoint closed up 5 3/8, or 4%, at 140 3/16.)

Under the terms of the deal, San Jose, Calif.-based Cisco will exchange 2.12 shares of Cisco for every outstanding share of and option of the young Massachusetts-based switch company pegged on the Thursday closing price of 63 5/8.

ArrowPoint's switches, which help Internet users find content through searches on the Web, can be integrated into Cisco's products.

The acquisition will be completed in the fourth quarter of 2000.