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Optical/IP

Sources: Cisco Rejects Optical Bids

Cisco Systems Inc. (Nasdaq: CSCO) isn't that anxious to drop out of the optical networking business. Two Light Reading sources say Cisco has turned down, in recent months, two possible buyers for the networking giant's optical portfolio.

One Silicon Valley source went further, saying Cisco thought the offers were too low. Cisco says it doesn't comment on rumors and speculation.

Layoffs, restructuring, and shuffled execs have led many to believe optical networking is becoming a second-class citizen at Cisco. Some believe the company isn't heavily promoting its DWDM boxes and multiservice provisioning platforms, instead focusing its optical energy on IP-over-DWDM. (See Optical: Cisco's Odd Man Out?)

Among the most telling signs, observers say, is the removal of optical from Cisco's "Advanced Technologies," which represent potential $1 billion annual revenue opportunities (wireless, security, and home networking, for example). Cisco also stopped spelling out its optical revenues, beginning in its first quarter of 2007, which ended in October.

Executives did give one hint for that quarter, though, saying optical revenues grew in the mid-20 percent range. (See Cisco Soars in Q1.)

Analyst Joe Chiasson of Susquehanna Financial Group figures the ONS 15454 -- the flagship box acquired with Cerent Corp. in 1999 -- is the only real moneymaker in Cisco's optical arsenal. But that money isn't trivial, meaning Cisco probably isn't desperate to part with the box.

"It wouldn't surprise me, if somebody lowballed this, if they said, 'Take a walk,' " Chiasson says.

Prior to talk of the bids, optical networking didn't figure to be a big topic at Cisco's annual analyst conference, which starts tomorrow in downtown San Jose. And it still may not be, as CEO John Chambers lately has been more excited to talk about IPTV, developments with Scientific Atlanta , and the new TelePresence line of videoconferencing gear. (See Cisco Dials Up Videoconferencing.)

— Craig Matsumoto, Senior Editor, Light Reading

Pete Baldwin 12/5/2012 | 3:32:44 AM
re: Sources: Cisco Rejects Optical Bids I suppose one possibility is for Cisco to keep the 15454 (and associated boxes like the '327) and sell the rest... but who would buy that?

You'd have the 15600, the 15500... not much else.

Seems like any interested buyer would wan the 15454, yes? And I agree that Cisco wouldn't want to (or have to) lowball that sale.
materialgirl 12/5/2012 | 3:32:41 AM
re: Sources: Cisco Rejects Optical Bids Maybe they have been out classed by newer technologies from startups, and will just wait to buy their way into a newer generation of product.
paolo.franzoi 12/5/2012 | 3:32:40 AM
re: Sources: Cisco Rejects Optical Bids
Yep those fast movers like Fujitsu are rushing past Cisco Optical.

seven
somedumbPM 12/5/2012 | 3:32:40 AM
re: Sources: Cisco Rejects Optical Bids I believe that is their method of R&D.
Pete Baldwin 12/5/2012 | 3:32:39 AM
re: Sources: Cisco Rejects Optical Bids >I believe that is their method of R&D.

Funny you should mention that -- Charles Giancarlo quipped about that at the Cisco analyst conference just today:

"There was criticism in the press for some time that Cisco couldn't innovate, that Cisco had to buy -- and I was wondering what happpened to all those entrepreneurs who, the day we bought them were very innovative and once they arrived at Cisco couldn't innovate their way out of a paper bag..."

Cisco claims to have all kinds of internal startups going ... It was one of the bigger points at their analyst keynote. Story at:

http://www.lightreading.com/do...
brahmos 12/5/2012 | 3:32:31 AM
re: Sources: Cisco Rejects Optical Bids cisco's core is a collection of fiefdoms run by politically powerful warlords tied by webs of alliances dating from the good old days. if you are in the right clan and were in same bought startup as The warlord, lucky for you - spin ins, new product development, visibility, promotions.

if not, one gets to sit long hours everyday and fix bugs on ancient prducts thats widely deployed and just wont die - so they keep a army of serfs to deal with "customer escalations" and some managers to soothe the troops and string them along.

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