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TMCNet:  Cisco spends nearly half a billion dollars on Israeli wireless-network software maker

[January 23, 2013]

Cisco spends nearly half a billion dollars on Israeli wireless-network software maker

SAN JOSE, Jan 23, 2013 (San Jose Mercury News - McClatchy-Tribune Information Services via COMTEX) -- Networking giant Cisco (CSCO) announced Wednesday morning that it had agreed to pay $475 million for Intucell, an Israeli company that produces networking software that allows wireless carriers to handle the increasing traffic on their systems.

With customers connecting more powerful smartphones and tablets to cellular networks, carriers face a growing burden that Intucell's self-optimizing network, or SON, software can help them manage, Cisco said in Wednesday's announcement.

"The mobile network of the future must be able to scale intelligently to address growing and often unpredictable traffic patterns, while also enabling carriers to generate incremental revenue streams," Kelly Ahuja, senior vice president and general manager of Cisco's Service Provider Mobility Group, said in the news release. "Through the addition of Intucell's industry-leading SON technology, Cisco's service provider mobility portfolio provides operators with unparalleled network intelligence and the unique ability to not only accommodate exploding network traffic, but to profit from it." Intucell was founded in 2008 by CEO Rani Wellingstein and Ido Susan, who is currently vice president of products. In 2011, it received a venture capital boost from Bessemer Venture Partners; technology blog TechCrunch reported Wednesday that the investment was $6 million, but led to Bessemer receiving half of the windfall Cisco has agreed to pay for the company.

Cisco will pay the $475 million in cash as well as incentives to Intucell employees to stick around and work for the San Jose company. Cisco expects the deal to close in the current quarter, its fiscal third quarter.

The Intucell acquisition may just be a start for Cisco as well, as CEO John Chambers said late in 2012 that the company's security-software leader, Chris Young, has a "blank check" to boost the company's security offerings, according to a Reuters report released last week. That report also noted that Cisco has acquired almost 160 companies in the last 20 years.

Cisco stock did not receive a bump from Wednesday's news, instead falling 0.6 percent to $20.74 at 7:30 a.m. Pacific time, one hour into the day's trading session. The company is scheduled to release earnings results from its fiscal second quarter on Feb. 13.

Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.

___ (c)2013 San Jose Mercury News (San Jose, Calif.) Visit the San Jose Mercury News (San Jose, Calif.) at www.mercurynews.com Distributed by MCT Information Services

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