Cisco Buying Airespace?

Wireless LAN behemoth Cisco Systems Inc. (Nasdaq: CSCO) is finalizing a deal to acquire switch startup Airespace Inc. for between $400 million and $425 million, according to sources.

Cisco has long been rumored to be looking into acquiring a wireless LAN switch company to bolster its centralized management story. In fact, the company is also said to have looked at Aruba Wireless Networks as a potential acquisition candidate in the past (see Is Cisco Seeking Security?).

News.com first reported rumors of an acquisition, citing a price of between $400 million and $500 million for the buyout.

Unstrung has been told that Cisco is now fairly well advanced with the Airespace acquisition and the deal should close within 20 days. The deal is now said to be in the hands of the Department of Justice.

Airespace wouldn't comment on what it described as rumors. Cisco hadn't returned calls by press time.

Airespace is the fastest growing of the new breed of wireless LAN switch startup. After just two years in operation, it is now the third largest supplier of enterprise wireless LAN equipment after Cisco and Symbol Technologies Inc. (NYSE: SBL). (See Synergy: Switches Sizzle .)

Airespace made revenues of $18.2 million in the third quarter of 2004, according to Synergy Research Group Inc.

Acquiring Airespace would help give Cisco the technology portfolio to battle Symbol and the startups in 802.11 switch market. It would also be a big black eye for Cisco's networking rivals Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and Nortel Networks Ltd. (NYSE/Toronto: NT), as both of these firms offer rebadged Airespace kit as part of their WiFi portfolios (see Alcatel & Nortel Push VOWLAN).

Cisco's last wireless LAN acquisition of this magnitude was consumer device maker Linksys for $500 million last year.

— Dan Jones, Site Editor, Unstrung

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mindless 12/5/2012 | 3:30:46 AM
re: Cisco Buying Airespace? Wake Up! If Airspace is bought by Cisco , it will have been for a number of factors. The more prevalent will be MarketShare, Branding, execution and future direction and then technology. Based on that - Aruba is not an attrative target for aquisition. They don't have the marketshare or momentum and haven't proven that they can execute past a technical level ...
lrmobile_bitsandbytes 12/5/2012 | 3:30:46 AM
re: Cisco Buying Airespace?
That means that Aruba will be valued at nearly $600mil considering the fact that their technology and security solution is far advanced.
freetoair 12/5/2012 | 3:30:46 AM
re: Cisco Buying Airespace? wow is all I could say...
grywlfbg 12/5/2012 | 3:30:45 AM
re: Cisco Buying Airespace? The only problem being the VAST majority of Airespace sales has gone through OEMs. OEMs which compete with Cisco and I assume will no longer carry the product once it becomes a Cisco product. Which makes branding irrelevant. Cisco rebrands everything to their own.

Plus, Airespace's "blue box" revenues are lower than Aruba's. So in fact discounting OEMs, Airespace's marketshare is lower than Aruba's.

The only reason they're buying Airespace is because Aruba already turned them down.
mpatnaik 12/5/2012 | 3:30:45 AM
re: Cisco Buying Airespace? What is your feeling on how SBL will be hit by this acquistion? In terms of market share etc.?
eurichardson 12/5/2012 | 3:30:44 AM
re: Cisco Buying Airespace?
The Aruba folks in this message board clearly sound like sore losers. Which startup company would not want to be acquired for $400-$500 million dollars these days?
wonderfull 12/5/2012 | 3:30:43 AM
re: Cisco Buying Airespace? In a recent quarter Airespace claimed $15M revenue...

With a $60M annual revenue run rate....$425M is x7 expected revenues...

Sweet deal...considering the known problems at Airespace..

So Aruba and Trapeze will be surviving switch vendors ????

lrmobile_boondocksbandit 12/5/2012 | 3:30:42 AM
re: Cisco Buying Airespace? The relative merits of Aruba versus Airespace solutions can be debated endlessly. I doubt it was a significant factor in Cisco preferring Airespace. More likely it was the revenue stream (that was 2-3x that of Aruba, if the research reports are to be believed) and that with this deal Cisco could trip a competitor or two (OEM customers of Airespace). I suspect that a "for-sale" sign is being put up at Aruba right now :-) BTW, whatever is going on with Trapeze, Meru, Vernier & the like?
mindless 12/5/2012 | 3:30:42 AM
re: Cisco Buying Airespace? Outside of the more obvious business drivers - lets take a closer look at the technology drivers:

Could be that Aruba's choice of switch Architecture/firmware/SW is so different than what Cisco is running with that forward homolgation would be too resource intensive - Cisco has made puchase decisions heavily weighed by this factor in the past. ( One of the reasons they bought Arowpoint instead of Alteon - where the founder and several engineers originated - for instance).

Not entirely sure of Airespaces choice of chip sets and bus interfaces - but the switch to AP protocol is at least well defined and published, their new managment interface is spot on and their roadmap and broadening technology incorporation closley dovetails into Cisco's view of convergence.

Add that to Cisco also getting to throw a big wrench into the works at Nortel and Alcatel while benefitting from the promise of a tighter relationship with IBM and retaining control of Microsofts WLAN network starts to make this look pretty attactive.

All Aruba has to offer is a switch/firewall that supports access points and a poorly orchestrated "grid" marketing ploy ... who needs that?
WF_TOP_GUY 12/5/2012 | 3:30:39 AM
re: Cisco Buying Airespace? Aruba.....is now on morphine drip and the bed sheet is about to be pulled up over their head.

This annoucement is yet another nail in the coffin.....oh by the way another firing in central region......lol..........good job that Walt Foss go it up and running before he left!!!

LOL......nananananananaan hey hey GOOD BYE!!!
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