Cisco buys wireless network firm Starent for $2.9b

Dylan Bushell-Embling
14 Oct 2009

Cisco aims to cash on in the mobile broadband boom with the acquisition of Starent Networks for $2.9 billion

Cisco will pay $35 per share in cash for the acquisition, which subject to approvals is expected to close during the first half of next year. Cisco said it expects the purchase to be earnings accretive in FY12.

Starent’s gear allows carriers to deliver IP services such as VoIP, video and internet access between wireless and IP networks. Its products act as gateways between W-CDMA, cdma2000 and Wi-Fi radio access and IP core networks.

But analysts have suggested that deal may have been a preemptive strike aimed at rival Juniper networks.

Juniper was rumored to be on the verge of reaching a partnership deal with Starent, GigaOMreported.

If so, this acquisition may have left it scrambling for an alternative strategy for helping mobile operators transition to 4G, analysts from UBS and DB Equity Research said.

It is Cisco’s second major acquisition in the last month, following a tilt at videoconferencing vendor Tandberg for $3 billion. It has expanded from traditional core networking business into collaboration, the data center and home networking. But the Starent acquisition shows that Cisco is still focusing on the carrier market.

Starent was formed in 2000, and launched an IPO in 2007. The company recorded revenue of $254.1 million last year, a 74% increase from the year before.

In a blog post, Cisco senior director Simon Aspinall said the acquisition was an acknowledgment that mobile browsing is transforming the internet.

“We believe the mobile internet is a huge transition that is happening very quickly, and we believe this is the right time for Cisco and Starent Networks to combine their strengths,” he said.

Global mobile data traffic is expected to more than double every year through 2013, according to the Cisco Visual Networking Index.

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