Cisco buys telecoms firm

Networking giant Cisco is expanding its hold on the communications market with its purchase of telecoms software company GeoTel in a deal worth $2 billion.

The acquisition, which is being termed a pooling of interests, will help Cisco in its quest for voice, video and data integration, as GeoTel specialises in software for enterprise and service providers' voice call centres.

GeoTel's technology will be used to help provide voice applications over internet-based networks.

GeoTel's share price rose sharply when the buyout was announced, trading at $58.5. Cisco's stock remained unchanged. The deal is to be completed by the fourth quarter of Cisco's financial year.

John Thibault, president and chief executive of GeoTel, said: 'We believe Cisco's position in the industry, its customer focus and commitment to technological excellence provide the ideal combination for effectively extending the global reach of our products.'

Don Listwin, executive vice president of Cisco, added: 'The announcement is an extension of our commitment to open voice technology.'

The move continues Cisco's expansion through acquisition after purchasing Fibex Systems and Sentient Networks for a combined total of $445 million last week. Both will be used to sell telecoms equipment across ATM networks to ISPs (PC Dealer, 14 April).

The purchase, which was unveiled on 13 April, will see Cisco exchange 0.5 shares of its common stock for every outstanding share and option of GeoTel based on the closing price on 12 April of $44.25.

The buy is the final step of Cisco's enterprise data, voice and video integration strategy, extending call control and management software to packet-based networks.