April 28, 1999 10:20 AM PDT

Cisco buys Amteva in strategic move

Internet networking giant Cisco Systems today announced it will buy Amteva Technologies in a move to further its push to bring data, voice, and video traffic over a single Internet-based network.

Amteva, a privately held company, develops middleware that allows a user to combine voicemail, email, and fax traffic into a single mailbox accessible over an Internet protocol (IP) network, according to the company.

In the deal, Cisco will exchange $170 million in cash and stock for all Amteva's outstanding shares.

Cisco stepped in to purchase Amteva just months before the start-up planned to file for a public offering, according to a source close to Amteva.

Analysts agreed that Cisco has to move quickly as rival giants Lucent Technologies and Nortel make their own moves in this unified messaging space.

"What [Cisco] is acquiring is both the technology and the experience of companies like Lucent and Nortel in [voice and data]," said David Takata, an analyst at Gruntal. "It's an important strategy for Cisco as big voice players want to collapse the voice market on top of the data market."

With the acquisition, Cisco expects a one-time charge against after-tax earnings in the fourth quarter of between 2 cents and 7 cents per share for research and development expenses.

Analysts also noted that if unified messaging services become more mainstream, the technology will increase demand for more routers, hubs, and switches--to the benefit of Nortel, Lucent, and Cisco.

Earlier this month, Cisco rolled out its strategy with a number of partners to provide unified messaging technology. The company planned to use its AS 5000 line of dial-up access hardware as well as technology from third-party companies, like Software.com, Netcentric, and Amteva.

Cisco said that it plans to combine solutions from its acquisitions of Selsius, GeoTel, and Amteva to provide basic voice services and advanced features over a standards-based network.

Cisco also said this acquisition supports the fourth and fifth phases of its five-phase enterprise data, voice, and video integration strategy to extend communications to IP-based infrastructures.

An integrated strategy will require the system to respond extremely fast and in real-time basis while being fault tolerant, analysts noted. The system also needs to be highly scalable, to keep up with demand if the popularity of the service grows, they added.

Glen Falls, Virginia-based Amteva was founded in 1995 and has 144 employees. The company's president and chief executive Dean Dodrill will report to Cisco's Listwin.

Shares of Cisco slipped 1.8125 in early afternoon trading to 113.25. The stock has hit a high of 120 and a low of 41.23 in the past 52 weeks.

Cisco will announce its third quarter 1999 financial results after the close of the market on May 11.

 

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