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Optical/IP

Cisco/Procket Deal Imminent

Today's the big day for news on whether Procket will be acquired, say several sources.

Two sources close to Procket Networks Inc. have told Light Reading that the company's fate will be made today. As ever, there's intrigue here because only one of the two sources would name the acquiring party -- and that source says its Cisco Systems Inc. (Nasdaq: CSCO). Foundry Networks Inc. (Nasdaq: FDRY) has also been mentioned as a suitor, but that now appears less likely -- and Cisco certainly has the deeper wallet to make the deal happen.

The deal, reportedly worth $80 million, has been expected this week since a flurry of reports detailing a potential deal dropped last week (see Cisco May Pocket Procket).

Cisco has since put forth that, while it would never buy a competing product, it doesn't mind acquiring the talent that built the competing product. "I'm not going to buy another router company for a router," Chambers told a Bear Stearns investment conference yesterday, according to reports by Reuters and The Wall Street Journal. "I could not be more comfortable with our routing strategy...

"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 added, according the Reuters report.

However it's sliced, Cisco is about to purchase one of the routing upstarts that, if nothing else, provided a catalyst for Cisco to get its own next-generation core router, the CRS-1, built and released after several years of fits and starts (see Cisco Unveils the HFR).

While it will be interesting to see what Cisco will do with the technology, it will be more interesting to watch the marketing story unfold. Never before has a routing market leader announced its own next-generation product, then purchased a competitor solely for staffing reasons.

Calls to Cisco were not returned in time for this article.

— Phil Harvey, News Editor, Light Reading

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liang 12/5/2012 | 1:34:21 AM
re: Cisco/Procket Deal Imminent Somehow I got the impression what Chambers said just put HFR's couple of hundred engineers into the "untalented" category.
maximuscomehome 12/5/2012 | 1:34:21 AM
re: Cisco/Procket Deal Imminent --" the message will be announced at 3pm today"


Do you know where your (Procket) kids are?

Massimo
see_the 12/5/2012 | 1:34:20 AM
re: Cisco/Procket Deal Imminent It is 5 O'Clock somewhere (courtesy of Jimmy Buffet and Alan Jackson)

Lightreading,

You may be a dupe (or a dope)... Certainly, the 3 O'Clock was missed.... Now, is there a deal at all?? Enquiring minds want to know!?!?!!

Alpine 12/5/2012 | 1:34:20 AM
re: Cisco/Procket Deal Imminent Coreghost,

Procket raised $300m since inception including the round closed last december. The terms of that round restructured previous rounds and according to employee presentations the terms contained employee carveouts in the event of an acquisition so the employees got something. How csco treats the employees remains to be seen.

At an $80M buy out only Series D investors would probably get anything based on the december financing since the round had liquidation preferences which favored Series D. All other preferred and common would likely get nothing. Even former employees that excercised there options are likely to get zip.

Of course this is all speculation since the buyer has a big role in the term sheet of any deal.
icenine 12/5/2012 | 1:34:20 AM
re: Cisco/Procket Deal Imminent Don't know the procket specifics, but know some of the VCs. Some observations.

The paid in capital is mostly preferred. So, common has no value. And has had no value for some time. There are 2 ways people are taken care of.

One is a carve out. 10% to 15% of the purchase price may be set aside to be allocated to the people still on-board. Dooled out per the discression of the BOD / mgmt. The other way is if part of the carve out is reserved to give a few cents per share to common. This will happen if big holders of common (not options) are on the BOD. Then all common can enjoy some return.

Those very early folks who bought their common may actually get their money back. Anyone who bought after the value began to be managed up by the BOD will remain underwater.

No one will get what they planned on, but some may get a few $$.

gotman 12/5/2012 | 1:34:20 AM
re: Cisco/Procket Deal Imminent signmeup keep reading those gartner reports.
2% of what?? show me the press releases? 12 routers sold to an NRN in Australia is 2%?

Its easy to tell your not one of those talaneted people at procket.
edgecore 12/5/2012 | 1:34:19 AM
re: Cisco/Procket Deal Imminent What OS and what processors are used in procket boxes?

With CSCO core boxes you have a mix of MIPS and PowerPC with classic IOS on the GSR, combined with QNX based modular IOS or IOX on SMP PowerPC's for HFR.

If Cisco plans to merge any of that technology with Procket's, it could get interesting...or are the product irrelevant and it is purely a talent hunt!

EC
readingsbelieving 12/5/2012 | 1:34:18 AM
re: Cisco/Procket Deal Imminent
First it's 3:00, then it's "tonight," then it doesn't happen all night.

LR keeps us well-informed (of what, I have no idea).
santalk2000 12/5/2012 | 1:34:17 AM
re: Cisco/Procket Deal Imminent Now three sources ;)
http://biz.yahoo.com/rb/040616...
SillyValleyGuy 12/5/2012 | 1:34:16 AM
re: Cisco/Procket Deal Imminent Hi Tony,
Are you going to be part of the deal?
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