The networking equipment giant Cisco makes so many acquisitions that few of its deals merit a mention anywhere but the technical networking press. In most cases, the target company concerned has some good technology, but little to show in terms of revenues.
The company's agreement to buy Scientific Atlanta, is, however, on a far greater scale. The deal should close in the early part of 2006. In terms of significance, it compares with Cisco's $4 billion 1996 acquisition of switch maker Stratacom, a deal that swiftly separated Cisco from the rest of the chasing pack and established its dominant position today.
Scientific Atlanta? Who? The company is little known in IT circles, but in broadband networking and digital broadcasting, it is a 50-year-old giant, supplying products to all the major operators. The New York Stock Exchange listed company has revenues of nearly $2 billion, and 6,500 employees around the world.
The deal is a clear demonstration of the rapid convergence that is sweeping through the global networking markets – whatever the application. Scientific Atlanta's specialities, industry and Cisco watchers should note, are video distribution, and digital/analogue integration (such as set top boxes). But that may be simplified: in its publicity, Scientific Atlanta says, "We operate in one segment: Broadband."
The $7 billion deal shows just how much importance Cisco now puts on multi-media, high-bandwidth technology – markets that are still maturing and growing. As broadcasters, telecoms and cable companies all step up their investments in providing IP based, high bandwidth services, Cisco will stand out, far above its rivals, in its range of products and, as Gartner likes to say, the "extent of its vision".