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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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Tony Li 12/5/2012 | 1:34:16 AM
re: Cisco/Procket Deal Imminent What OS and what processors are used in procket boxes?

Procket uses LynxOS (www.lynuxworks.com) on PPC and x86 processors.

Tony
Tony Li 12/5/2012 | 1:34:15 AM
re: Cisco/Procket Deal Imminent This specific deal is (rumored to be) between Cisco and Procket. I have no connection to it other than being a stockholder in both.

Tony
maximuscomehome 12/5/2012 | 1:34:15 AM
re: Cisco/Procket Deal Imminent So Mr. Li:

Where in your minds will the procket technology fit best in the Cisco line-up

1. Enable new features on the 7000/12000 series?
2. As the new 'toaster' chip on the routers
3. Give routing functionality to the Catalyst line
4. Counter the 'embedded Netscreen' threat from Juniper
5. Give honest-to-goodness IPv6 functionality across the product line

..... come on now - it's not for the CRS-1, is it? Those guys - including the jocks still left over from the Stratum-1 acquisition - are pretty good engineers. They got that stuff under control.

It's really the non-CRS-1 router line from Cisco that needs this steriod shot.

- Massimo
xbar 12/5/2012 | 1:34:14 AM
re: Cisco/Procket Deal Imminent If the news are accurate, Acra leaves CSCO for Procket 4 months ago. Acra fires Li. CSCO buys Procket and Acra back. Weird
Tony Li 12/5/2012 | 1:34:14 AM
re: Cisco/Procket Deal Imminent I think that's not up to me and it's more of a product management decision than a technology decision.

Despite what John says, I'm sure that they will assimilate the technology somehow.

Tony
smpte 12/5/2012 | 1:34:11 AM
re: Cisco/Procket Deal Imminent http://newsroom.cisco.com/dlls...
gotman 12/5/2012 | 1:34:10 AM
re: Cisco/Procket Deal Imminent 1. Enable new features on the 7000/12000 series?

You will see the 7xxx to 12000 product line streamlined. I can see the PR technology on some
of the new mid range routers hitting the streets near you.

2. As the new 'toaster' chip on the routers

More or less...You will see less focus on PXF :)

3. Give routing functionality to the Catalyst line

That will be down the track, the switching products are very solid.

4. Counter the 'embedded Netscreen' threat from Juniper

Nah, you will see something else which will loosen the filling out of Juniper pretty soon.

5. Give honest-to-goodness IPv6 functionality across the product line

Sure you will see that.

This will have very little impact on HFR. Two years from now it might be different. The PSE on the HFR LC is pretty advanced in its own right. It would be a good test to see them up against each other.
diag_eng 12/5/2012 | 1:34:09 AM
re: Cisco/Procket Deal Imminent Tony,

You should sell your Procket stock certifates on EBay. You'll probably make more money.


brahmos 12/5/2012 | 1:34:04 AM
re: Cisco/Procket Deal Imminent a question - is there another network processor based edge router in market that matches what the csco 10000 PRE2 (PXF) does? just wondering if PXF has a future or it needs a better replacement?
romeo-foxtrot 12/5/2012 | 1:33:59 AM
re: Cisco/Procket Deal Imminent The number of people that will be retained is not announced, but a 2003 LR story pegged the number of employees at 250.

Assuming....

1) Cisco doesn't need the execs (Cisco has these)
2) 50 or so were removed to cut burn
3) 50 or so are support, admin, manufacturing, test, etc... and therefore not required
4) 25 or so are not "top talent"

...that would leave 100-125 employees that will be kept by Cisco. Probably the number is still high, but let's be optimistic.

So here's a different twist on these numbers.

Cisco is acquiring the intellectual property, namely some "best in class" silicon and routing engineers. Therefore the only thing they are really buying is the people they will keep.

The $89M of cash being spent is therefore worth between $700,000 to $900,000 per "top" employee.

Do you think these people will see anything like this kind of money themselves? NOT!!!

So the twisted math here would lead one to conclude that if you are a top employee, at a dying company, and can get a solid majority of your "top" peers to band together with you, you would be much better off to sell yoursleves personally.

Otherwise it is the last VCs in with the highest liquidation preferences, and the lousy senior management, that get all the returns.

That is some #$&*#@ twisted math!
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