April 9, 2008 -- (WEB HOST INDUSTRY REVIEW) -- Network equipment provider Cisco (cisco.com) announced this week its plans to fully acquire Nuova Systems (nuovasystems.com), a switch start-up it funded. It also unveiled the newest member of its data center switching line, a collaborative development between Cisco and Nuova Systems.
Cisco introduced the Nexus 5000 series switch this week at its Partner Summit conference in Honolulu, Hawaii. The company paid $50 million in August 2006 to acquire an 80 percent stake in Nuova Systems. It acquired the remaining 20 percent stake this week for $20 million.
Nuova stands to receive a maximum potential payout of $678 million depending on the revenue of Nuova products over three measurement periods, with the first measurement period falling early in Cisco's fiscal year 2010, the second in late fiscal year 2010, and the third in mid fiscal year 2011.
Nuova Systems was founded by ex-Cisco switching executives Luca Cafiero, Prem Jain, Soni Jiandani and Mario Mazzola. Other founders include VMware co-founder Ed Bugnion and Tom Lyon, a co-founder of IP provider Ipsilon Networks and a former Sun executive.
The six founders and Nuova's approximately 200 employees in San Jose, California and in Beaverton, Oregon, will reportedly join Cisco to continue working on data center-related projects.
The company will operate as an independent business unit of Cisco, headed by Cafiero, Jain and Mazzola, who will all report to Cisco CEO John Chambers. Additionally, Jain has been named the ninth member of Cisco's Development Organization, a council of Cisco executives in charge of managing the company's development priorities.
The acquisition, which is expected to close in the fourth quarter of Cisco's fiscal year 2008, will be the company's 126th acquisition in total and the fifth one in fiscal 2008.
