Cisco announces start-up acquisition

Cisco Systems has agreed to pay $82m in cash to acquire Actona Technologies, a small start-up that manages data across geographically separate offices.

The networking giant announced on Tuesday that it will integrate Actona's technology into its branch office product that currently combines a WAN (wide area network) connection with network security, IP voice communications, business applications and video services. Actona's technology will enhance that offering by expanding the functions of Cisco's branch office access routers.

Actona makes file-caching software that allows companies to consolidate servers and storage and centralise backup and disaster recovery processes. The technology allows remote and branch office workers to access corporate information at the same speed as those working at the company's headquarters.

Actona's technology consists of the ActoStor CoreServer, which sits in a central data centre, and several ActoStor EdgeServers, which sit at branch offices. The ActaStor EdgeServer presents a cached view of centralised storage to local clients. At the data centre, the ActaStor CoreServer attaches directly to one or more file servers, performing file requests on behalf of remote ActaStor EdgeServers.

"Today's distributed branch office storage management methods are complex and expensive," George Kurian, vice president for Cisco's routing technology group, said in a statement. "Providing intelligent network services so distributed enterprises can centralise file servers and storage, and better protect and cost-effectively manage their remote office data, is critical."

Cisco already offers a Web page caching appliance called the Cache Engine 500. This product helps Internet service providers and corporate customers accelerate the delivery of Web content and optimise WAN bandwidth usage. Back in 1999, Cisco bought a Web caching start-up called Tasmania for $25m.

Cisco was an early investor in Actona, and it already owns about 17 percent of the company. Under the new agreement, it will acquire all outstanding shares that it doesn't already own. It also plans to convert outstanding Actona options to Cisco options. The deal is expected to close in the first quarter of Cisco's fiscal year 2005, which starts on 1 July.

Actona was founded in 2000. It has offices in California and Israel. A Cisco representative said the company plans to keep all 48 of Actona's employees.

Actona is the second acquisition Cisco has announced in less than a month. On June 17, it announced its intent to buy core routing start-up Procket Networks for $89m in cash. Procket had raised more than $300m in venture capital funding.

Cisco's strategy has been called into question with respect to the Procket buy, because Procket's products compete directly with Cisco's newly announced CRS-1 router. Cisco has defended its plans by stating it is simply buying the company for its engineering talent. Roughly 130 engineers from Procket are expected to work for Cisco.