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Cisco Eyes 100gbps Networks With CoreOptics Buy

Cisco Systems Inc. (CSCO) on Thursday cranked up the pressure on networking-gear rivals with the announcement that it’s buying CoreOptics Inc.

CoreOptics makes digital signal processing (DSP) platforms for high-speed optical networking. Cisco will rely on the company to help “deliver IP next-generation networks at 100gbps and beyond,” Surya Panditi, a Cisco vice president and general manager, said in a prepared statement.

The CoreOptics acquisition also will further Cisco’s plans to support service provider customers trying to accommodate soaring Internet traffic demand while operating on tight budgets. Data-greedy services including video, mobile broadband and cloud computing are challenging operators’ capacity. Indeed, Cisco, according to its own internal studies, has projected global Internet traffic will increase five times between 2008 and 2013.

Cisco will pay about $99 million in cash and retention incentives in exchange for all shares of CoreOptics. The transaction should close in the second half of the year.

Like Cisco, CoreOptics is based in San Jose, Calif. However, unlike its new parent, CoreOptics employs most of its workers in Germany. That means Cisco will expand its optical presence in Europe, the company said. When the deal is finalized, CoreOptics staff will join Cisco’s service provider technology group, working with optical engineering teams in Monza, Italy; Bangalore, India; and Richardson, Texas.

The CoreOptics takeover marks Cisco’s second M&A move this week — on Tuesday, the networking giant said it’s buying Moto Development Group as part of its consumer strategy.

Both announcements come on the heels of Cisco’s better-than-expected fiscal third-quarter earnings report. Last week, the company showed a 63 percent jump in profit.

Nonetheless, shares of Cisco closed down 3.92 percent, at $23.31 on Thursday, although the entire U.S. stock market got pummeled as investors reacted to fears about the European debt crisis.


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