Cisco May Pocket Procket

Cisco Systems Inc. (Nasdaq: CSCO) is in talks to acquire routing rival Procket Networks Inc., and a deal may be close to being finalized, say sources close the company.

Rumors have been bubbling about the deal, and they were first reported yesterday in a networking Weblog, GigaOm. Yesterday evening Network World followed up on the story and reported the deal was done at $80 million.

One source told Light Reading today that the Procket board had signed on for a deal tagged at $80 million. Light Reading was unable to confirm this with a second source. Cisco was one of the original investors in Procket.

Employees at Procket reached by Light Reading on Friday say they've heard the acquisition rumors but have not been told by the company's managers what Procket's fate will be.

A few other Procket employees contacted by phone were not at work. They weren't on vacation, either. Hmmm...

Tony Li says he knows nothing.

What is without dispute is that Procket is trying to find another investor or parent, and needs to refuel or be acquired to keep running. Light Reading's sources said the company raised nearly $30 million at the end of last year. Procket acknowledge that it had raised some funding in January, but wouldn't discuss the funding amount.

"We had a first close of funds in late 2003 and intend to have a second close in Q1 2004 in the same series," said Roland Acra, Procket's president and CEO, in a statement provided to Light Reading in January (see Procket Stuffing Its Pocket).

A delay in that second close, which could have been tied to company milestones, is what may have propelled Procket to start talking to potential buyers. NTT Communications Corp. and Fujitsu Network Communications Inc. (FNC) were among the companies most recently approached, according to one source. Alcatel SA (NYSE: ALA; Paris: CGEP:PA) was an almost-done-deal that fizzled a while ago, say several former Procketeers.

"They tried to sell to Alcatel about a year ago, and when that didn't happen, the customers Procket was close to -- NTT/Verio and AOL, for instance -- took a step back," says a former Procket employee.

That source says the Procket talks with Cisco have gone far. Procket's top software developers -- A.E. Natarajan and Dino Farinacci -- recently visited Cisco's campus along with VP of engineering Jeffrey Purnell to talk technical specifics with the routing giant.

If Cisco did pull the trigger on a deal it would be getting some valuable technology and technical talent, while taking out a key challenger. "Procket challenged every technical boundary in advancing the state of the art for core routing," says a former senior Procket executive. "This may be the last challenge to the existing players in this market for many years, as to play in this market sector requires tremendous sustained investment spread across a broad product portfolio."

It's worth pointing out that Procket has often been reported in talks with suitors. Lucent Technologies Inc. (NYSE: LU) and Nortel Networks Ltd. (NYSE/Toronto: NT) have also reportedly sat across the table from the startup over the past few years (see Will Nortel Pick Procket? and Procket Talk Turns Up).

Cisco does hold a stake in Procket, but some feel it would be crossing a line to acquire the startup, sending a bad signal that conflicts with the recent launch of the new CRS-1 core router, which was unveiled just a few weeks ago Cisco Unveils the HFR).

"Cisco has always maintained that they don't buy competing products," says a former Procket employee who previously worked at Cisco. "They have always bought complementary technologies rather than taking out competitors."

Neither Procket nor Cisco would comment for this story.

— Phil Harvey, News Editor, Light Reading

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mr zippy 12/5/2012 | 1:34:50 AM
re: Cisco May Pocket Procket
"Fifty really sharp engineers can bring a product to market quicker than 500 can, so if ever there is a talent acquisition that makes sense to me in the market, I don't hesitate," Chambers told investors at a Bear Stearns conference in New York.

If Cisco did buy Procket, it would be interesting how many of the sharp engineers at Procket hung around.

I'd be guessing, based on what I know of Tony's background, that a lot of these sharp engineers have already worked at Cisco and Juniper. Whether they want to work at either of those places again, after having been part of the group of "Fifty really sharp engineers can bring a product to market quicker than 500" would be an interesting question to see the answer to.
mr zippy 12/5/2012 | 1:34:51 AM
re: Cisco May Pocket Procket Style seems the same.

Oh well, another pseudonym to add to the filter.

It would be minor justice if Tony could take away the use of technology he has contributed to the Internet for select people. Truelight1's and ehwhatsupdoc's trolling would only go so far as their ISPs AS ...

jeepman 12/5/2012 | 1:34:53 AM
re: Cisco May Pocket Procket FatherConfessor wrote:

"Ok, the word on the street is that this deal is for real, However, the price is $800 million, not $80 million!"

John Chambers said:

"Fifty really sharp engineers can bring a product to market quicker than 500 can, so if ever there is a talent acquisition that makes sense to me in the market, I don't hesitate," Chambers told investors at a Bear Stearns conference in New York.

"I'm a risk taker," he added. "What you can count on is I'm not going to buy another router company for another router."


So $800M / 200 employees ==> $4M per head

Quick, where do I sign up ? :-)

FatherConfessor 12/5/2012 | 1:34:55 AM
re: Cisco May Pocket Procket Ok, the word on the street is that this deal is for real, However, the price is $800 million, not $80 million!
OpticOm 12/5/2012 | 1:35:00 AM
re: Cisco May Pocket Procket ehwhatsupdoc-you are an idiot.
procketear 12/5/2012 | 1:35:00 AM
re: Cisco May Pocket Procket i'm sure there are many engineers who went to procket to get away from cisco. I dont think they want to go back to cisco. If cisco were to buy procket, I dont think most of the engineers are going to stick around, unless there visa's are about to expire and are running out of routing companies to work for. procket was supposed to defeat cisco and be able to laugh in there face at the next 1000 nanogs. it was harder than everyone thought, and now there going to sell all the hard work of all the hard working people including the many who got layed off for pennies on the dollar. I really hope this is some retarded rumor.

procketear (although i never felt like one)
ehwhatsupdoc 12/5/2012 | 1:35:01 AM
re: Cisco May Pocket Procket Silicon Valley is a place of nerds. Tony is one of them - a super-nerd. Some of you out there worship that. And there's nothing wrong with nerd worship.

Nerds often create value. Tony is one who has proven to do otherwise. At Procket - he is now truly hated after his posts on this board a few days ago.

His attitude sucked while still employed there. And now after getting fired/pushed out/whatever you wanna call it, he's acting out again on this board.

Real class Tony.

To all potential employers - beware. You're getting a proven diaper-wetter, a classless jerk.

Tony Li - the nerd jerk who lives only for his own ego.
ehwhatsupdoc 12/5/2012 | 1:35:04 AM
re: Cisco May Pocket Procket Real smart Tony... brilliant comment on two bids on Ebay.

Did Dino and Bill call you up and say - "Haha Tony, I love you man!"

Keep looking for a job you moron.
beowulf888 12/5/2012 | 1:35:04 AM
re: Cisco May Pocket Procket Coreghost:
Thank you for cutting through the hype and anti-hype (hate?) on this list. Good posting.

Back to the subject heading, though. I can think of several good reasons for Cisco to do a deal with Procket...

1. Deprive your competitors of some really good technology.
2. Deprive your competitors of some really good technology that *you* invested money in developing.
3. Keep your competitors off-balance by giving them multiple potential platforms to compete against -- while solidifying the CRS functionality and stability (or not).

I think the argument that Cisco won't want to support another platform isn't supported by their history. Cisco has never been squeamish about supporting a wide variety of platforms. What differnce does one more make -- and $80 million is chump change. In fact, despite the overhead of supporting dozens of product lines, hundreds of platforms, and a couple of thousand of different versions of IOS (not to mention non-IOS OSes), it's Cisco's wide range of products that had made them the 800-lb Gorilla.

As for the rumors that the CRS is not ready for prime time, the folks I know at Cisco seem pretty confident about it (and downright proud of it). Having a long history of working with, then at, then with Cisco again, I tend to think that betting against the CRS is a bad idea.


Coreghost wrote...
Lets keep this reasonably close to the truth.

Procket has a handful of small customers.

Carriers are not rushing out to buy procket

The idea that the HFR is 18 months behind
in testing vs. procket is false. The idea
that procket is 100% tested and totally proven
out is equally false. As far as 90% of carriers
are concerned, neither system is proved out.

Further, cisco is not in a crisis vs. the T-640
that requires them to deploy an unproven procket
system. The CRS received a big yawn from most
carriers, but so did procket. Neither has
anything very compelling to offer anyone.
signmeup 12/5/2012 | 1:35:13 AM
re: Cisco May Pocket Procket the_lord wrote:
"Anyway, I am sure that the SEC would love to talk to a few of these leakers"

Talk to them about what exactly?!?! About deals that didn't go through? If you think that qualifies an investigation by the SEC, perhaps you should read up on what the current laws state.

Oh, and this is not a 'partnership' as you are describing it. These are rumors about an acquistion for the assets of Procket.

As far as the rest of your rant is concerned, I can't understand what you are most upset with - the fact that Procket has been rumored to be in talks with these folks, or that the rumors have surfaced.
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