Cisco Snaps Up Sheer Networks in $97 Million Deal

Cisco Systems (Nasdaq: CSCO) today announced a definitive agreement to acquire privately held Sheer Networks in a US$97 million cash and assumed options deal . Sheer Networks develops intelligent network and service management products for service providers and large enterprises.

Cliff Meltzer, senior vice president for Cisco's Network Management Technology Group, said the acquisition would strengthen the company's ability to provide innovative and effective network management solutions.

"Our blueprint for Cisco network management includes a common services platform on which applications are delivered and the ability to support management applications from Cisco and other vendors," Meltzer said. "Sheer has a similar philosophy and parallel architecture, which will accelerate our delivery of Cisco's next generation management platform and advanced applications to our Service Provider customers."

Sheer Profits

Cisco said Sheer's virtual network model hides the complexity of physical networks in a way that makes them accessible to a variety of management applications. This Dynamic Network Abstraction layer makes them transparent and accessible to a broad range of management applications.

Building on the Sheer Networks technology and platform, Cisco said it would develop and sell device-, network- and service-level management applications enabling intelligent management across multi-vendor networks and network-based services.

Cisco said it would also enable other hardware and software vendors to develop and deliver applications that can interoperate with Cisco applications through standards-based APIs. These same APIs enable integration into service provider OSS/BSS environments.

Cisco's Acquisition Streak

Enderle Group principal analyst Rob Enderle told TechNewsWorld that Cisco was created via an acquisition and continues to build out its portfolio of products with the same strategy.

Indeed, Cisco snapped up Voice over Internet Protocol company KiSS Technology last week. Previously, it acquired data sniffing firm NetSift in June. It scooped up data center player FineGround in May, and the list goes on.

"Cisco seems to have had a real good idea of what it needs to be a networking powerhouse. At the end of the day, there is nobody quite like Cisco in this space," Enderle said.

Analysts said Cisco has adopted a get-to-market-fast strategy that depends on gobbling up start-up companies and developing technologies in-house. The end result is an industry behemoth that seems to get a little bit bigger each month as new acquisitions are announced.

"Cisco not only develops technologies quickly, but when someone else develops something they need more quickly, they just go out and buy the company," Enderle said. "That way they get to the finish line first regardless. Cisco has proven itself to be incredibly flexible in that regard."

Deal Details

After the close of the deal, the Sheer Networks team will be melded into the Network Management Technology Group headed by Meltzer. Founded in 1999, Sheer Networks has 100 employees in San Jose, Calif., and Petach Tikva, Israel.

The acquisition price may increase by as much as $25 million depending on the degree to which certain development and product milestones are met after close. The deal is expected to be finalized during the first quarter of Cisco's 2006 fiscal year.