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Cisco to Buy Airespace to Expand Wi-Fi Effort

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From Reuters

Internet equipment maker Cisco Systems Inc. said Wednesday that it would acquire privately held Airespace for $450 million in stock and assumed options, a move that expands Cisco’s offerings in the growing market for wireless data transmission.

San Jose-based Airespace makes equipment for wireless fidelity, or Wi-Fi, a technology that allows users to connect to the Internet or other networks without cumbersome cables, through the use of short-range signals.

Cisco, also based in San Jose, said the deal was subject to regulatory approval. It is expected to close in the company’s 2005 fiscal third quarter, which ends in April.

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The expanding Wi-Fi market, which is dominated by Cisco, has become increasingly complex as corporate customers require more sophisticated systems and services to help them install multiple access points with varying levels of security.

Cisco said the deal helped it to address a broader segment of the market. Airespace’s products include WLAN controllers, Access Points, software and security.

“Airespace is a strong technological and cultural fit with an outstanding team,” said Luca Cafiero, a Cisco vice president.

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Cisco, whose appetite for acquisitions peaked in 2000 with more than 20 deals, bought 12 companies last year. The last deal of the scope of Airespace was Cisco’s $500-million purchase of Linksys Group Inc., a maker of home-networking products, in March 2003.

Airespace in September won a key partnership with IBM Corp. to offer Wi-Fi systems to some of Big Blue’s corporate customers. At the time, some analysts considered the deal a coup, given that IBM is among Cisco’s largest customers. Airespace was backed by about $60 million in venture capital.

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