Cisco to Buy Optical Networking Vendor CoreOptics

Cisco Systems will buy CoreOptics for about $99 million in a deal that should push forward the company's optical networking business at a time when service providers are looking for ways to handle the rapid growth of Internet traffic brought on by video, mobile devices and cloud computing. It is the second acquisition Cisco has announced in a week, having said it is buying Moto to boost its ambitions in the consumer space.

Cisco Systems has announced its second acquisition in three days, this one in the optical networking space.

Cisco revealed May 20 that it was buying CoreOptics for about $99 million, in a deal that officials expect to close in the second half of 2010.

The deal comes two days after Cisco announced it is buying Moto Development Group, which will be a boost to the networking vendor's push into the consumer space.

Cisco officials said they see the ramping up of the company's optical networking as important because of the rapidly growing amount of Internet traffic being driven by video, mobile devices and cloud services.

"With this acquisition, Cisco reinforces its commitment to continue to invest in its core networking business and to deliver IP next-generation networks at 100 [gigabits per second] and beyond," Surya Panditi, vice president and general manager of Cisco's Service Provider Access and Transport Technology Group, said in a statement.

With CoreOptics in the fold, Cisco will be able to offer service providers 100G-bps transmission capabilities to help them meet the growing traffic demands.

Scaling will be crucial to service providers, according to Cisco. The company expects global Internet traffic to grow five times between 2008 and 2013.

Cisco officials said innovation in optical networking will be based around sophisticated modulation formats and advanced DSP (digital signal processing) technologies, which will enable service providers to move large amounts of data over existing fiber optic networks.

That will be a key issue for service providers that are looking for help in handling the rapid growth in network traffic while also trying to keep down costs, including capital expenditures.

The CoreOptics team-most of which is housed in Germany-will join Cisco's existing optical business, some of which is located in Italy.

While it has an optical networking business, Cisco hasn't been a major player in the space, according to reports. The company made a few acquisitions in the area in 1999, scooping up Cerent, Monterey Networks and Pirelli Systems.