agreed Monday to acquire closely held Internet protocol outfit P-Cube for $200 million in cash and options.
San Jose, Calif.-based Cisco said P-Cube develops IP service control platforms. The company said the software can help service providers identify subscribers, classify applications, improve service performance and charge for multiple IP services without costly infrastructure upgrades.
The move comes as Cisco seeks to broaden its product line beyond its core business of selling Internet traffic-management devices called routers. Cisco continues to dominate that market, but with growth in information technology spending remaining tepid, the company has sought to hedge its bets -- and possibly find new growth areas -- by expanding into other niches.
The acquisition of Sunnyvale, Calif.-based P-Cube helps Cisco to offer service providers additional capabilities to control and manage advanced IP services such as voice-over-IP, interactive gaming, video-on-demand and peer-to-peer. Grabbing market share in the service provider market has been a challenge for Cisco, which typically has focused more on internal networks at big companies.
Cisco seems to have put a high value on the P-Cube deal, at least going by the price-per-employee metric commonly used in some tech circles. By that measure, Cisco paid $1.7 million per employee for P-Cube. That is nearly four times the $437,000 Cisco paid per employee for video conferencing systems maker Latitude last year.
The deal is expected to close in Cisco's first quarter ending in October. The company expects to take a one-time penny-a-share charge on the cost of the deal.
"Application and subscriber-aware technology solutions like P-Cube's provide the ability to differentiate and control new content-based data services," said Cisco's Mike Volpi. "This technology complements Cisco's overall portfolio of Broadband Edge products."
On Monday, Cisco rose 16 cents to $19.04.