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Cisco Systems has inked an agreement to acquire Sipura Technology, a voice-over-IP provider, to spark new development in its Linksys division.
Under the agreement, Cisco will pay approximately $68 million in cash and options for Sipura. The deal is expected to close in June 2005 after regulatory and shareholder approval.
Once the acquisition of Sipuras technology and expertise is integrated into Cisco, the company expects to speed toward creating new products within its Linksys division.
The division focuses on wireless and networking hardware for home and small office environments and is currently the leading vendor of consumer VOIP products in the United States. Linksys has partnerships with AT&T and Vonage. Sipura has already provided technology for the divisions current line of VOIP networking devices, according to Cisco.
Founded in March 2003, Sipura develops analog telephone adapters as well as multiline IP phones, and has contracts with a number of partners like Nortel Networks. The company has been especially notable for establishing interoperability among different brands of VOIP infrastructure.
The acquisition is in line with other buys from Cisco, which tend to be more focused on expertise than a buyout of product lines, said Gartner analyst Mark Fabbi. “When Cisco looks for expansion, it concentrates on researchers as much as it does on technology,” he said. “That way, it builds a focus on what can be developed.”
By bringing Sipura under Ciscos wing, the company is hoping to bolster Linksys internal research and development capabilities in VOIP as well as video, and establish a stronger foothold in the consumer and small office markets.
Although Cisco plans to keep selling some Sipura products, the long-term goal is to incorporate Sipuras technology into existing and future Linksys products.
In announcing the acquisition, Cisco cited a recent report from the Synergy Research Group, which found that today there are close to 8 million home users worldwide using VOIP to make phone calls over broadband connections. By 2009, the market research firm anticipates that the number will zoom upwards to 58.9 million.
Calling VOIP a strategic segment for growth, Cisco Chief Technology Officer Charles Giancarlo said that Sipura will augment Linksys position in the rapidly growing consumer VOIP market, especially since the acquisition will result in added products in the near future.