Cisco buys backbone

Networking powerhouse Cisco Systems (CSCO) continued to fill gaps in its technology portfolio with acquisitions, grabbing network hardware maker Skystone Systems for nearly $90 million.

The Ottawa-based firm specializes in making ASIC (application specific integrated circuit) semiconductor products that handle traffic based on high-speed SONet (synchronous optical networking) and SDH (synchronous digital hierarchy) technology.

These technologies are used to speed data across the backbone of fiber-optic wide area networks of telecommunications companies and Internet service providers, two areas that Cisco has targeted for huge growth.

The move represents the first acquisition by Cisco since the March stock purchase of Telesend, a maker of IDSL (integrated digital subscriber line) modem technology. In May, Cisco made an equity investment in Tibco, a push software company owned by Reuters.

Rumors continue to swirl that the networking giant will open its wallet again soon for Hybrid Networks, a manufacturer of cable modems and other broadband Internet access technology.

The ASIC technology from Skystone will likely find its way into the 12000 line of next-generation Gigabit Switch Routers that Cisco plans to ship this fall, according to industry observers. The long-awaited routers are targeted at high-end Cisco shops that need extra capacity. The new networking box can route information at speeds of up to 60 gbps.

The Skystone acquisition is expected to be completed by next month. The private firm's 40 employees will remain at their Canadian headquarters and will be integrated into Cisco's service provider business unit.