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Cisco agrees to buy Cerent and Monterey Networks

Posted by Hemos on from the getting-into-fiber dept.

Neo1 writes to us with the story that Cisco has agreed to buy both Cerent Corp and Monterey Networks for a combined 7.36 billion in stock. This move definitely makes clear Cisco's move into optical networking-especially when their Investor Relations has an overview of Optical Internetworking.

8 of 23 comments (clear)

  1. Mind boggling by SirSlud · · Score: 2

    > The purchase of Cerent is Cisco's costliest to date and is the latest sign of the Internet's mind-boggling impact on corporate valuations. Cerent commanded the extraordinary price even though it has posted only $10 million in sales in 2 1/2 years in business and has never turned a profit.

    Sure makes ya think. So far we can tune into audio, video, stocks, text, 3d all over the web. I wonder if stuff like this is still going to happen once we develop a protocol to pipe /reality/ through the Internet's intestines?

    Actually, I'm just being silly. I'm assuming the technologies that Cerent is working on look to be the next big thing inso far as network infrastructure is concerned? Still, it's amazing how the face of business is changing. From RedHat's intergalactic stock launch to this, is common sense losing it's place in business and economics? Are we setting ourselves up for some sort of reality shock? Where is the money actually going to and coming from?

    --
    "Old man yells at systemd"
    1. Re:Mind boggling by Caball · · Score: 2

      I believe Cerent is/was expected to have $100mm in sales in two years, so growth is there. Further, it is safe to assume that a router/optical switch with a Cisco name on it is going to sell better than one with Billy Bob on it.

      I guess the belief here by Cisco is that they need this type of technology to effectively compete in the future with Lucent, Nortell, etc., and it is cost-effective for them to aquire it this way. After all, Chambers isn't an idiot.

      You can think of it this way... all of the crazy valuations we see these days are based on potential future revenues. You mentioned $10mm in sales. Look at Amazon... What were their sales three years ago? $15mm? Now they have to be topping a billion. If you saw a company offer a crazy amount for Amazon three years ago based on $15mm in sales, you would laugh. But, look at the revenue (I didnt say anything about profits :) they generate today, and you would call that company brilliant.

      Lastly, I am surprised all of the whiners on the site don't slam Cisco. If you think about it, they are very much like Microsoft. If they can't make a better technology, they buy it. Also, due to their size and footprint, they have defined (could say control) some of the protocol's for network communication, much like MS does with the OS.

      In today's environment, you have to think of potential future value, and the costs associated with developing technology in-house when you assaign valuations. Crazy? Maybe, but then again...

      Signed,
      A happy CSCO (and MSFT) shareholder :)

  2. What else it might mean ... by timothy · · Score: 2
    Flak wrote:
    Cisco was the first to market with many technologies. All came from the same type of R&D projects.So what does this mean for you and me?


    Maybe it means we should buy some Cisco stock. ;)

    But I don't get your drift about xDSL - are you saying it does or does not have a short shelflife? If you're saying it's basically obsolete already, I disagree -- I think DSL will overtake cable modems for small-business and home connections, and become the technology that everyone uses for years and complains about as slow and old until it's replaced ... like phone lines have been for while.

    timothy

    --
    jrnl: http://tinyurl.com/c2l8yr / foes: http://tinyurl.com/ckjno5
  3. The buck makes a move by Flak · · Score: 3

    Cerent's first product, for example, can handle 240 gigabits of data a second, the equivalent of 3.8 million phone calls or 160,000 high-speed T-1 lines.

    I think this whole move says one thing very clear Broadband is right around the corner to every computer. Think about what Cisco just did. They put 6.9 billion into R&D err, bought a company and now have technology that will put them above their competitors again. Cisco was the first to market with many technologies. All came from the same type of R&D projects.

    So what does this mean for you and me? Simple we all will have a chance in the near future to have our fiber in our house plugged into a switch that can handle that kind of bandwidth. Humm, and who was it that said xDSL had a short shelflife...

    1. Re:The buck makes a move by jd · · Score: 2
      I'd rather have one of those two terrabit pipes. 240 gigabits just doesn't cut it any more. :)

      Seriously, though, this sounds cool. Incidently, whilst we're talking about high-speed networks, there's a gigabit TCP stack (Trapeze) that's out for BSD systems. If high-speed pipes look like they're around the corner, wouldn't it be a good idea for someone to port this to Linux?

      --
      It's a small world and it smells funny; I'd buy another if it wasn't for the money; Take back what I paid (SoM)
  4. What's interesting about this... by Jerky+McNaughty · · Score: 2

    If you look at Cerent last year, they only sold about 10 million. They were about to go under had it not been for Mr. Dell (of Dell computers) having invested 25 million. They couldn't even afford the payroll not too long ago.

    Now, for some reason, Cisco feels they're worth 7 billion.

    Kind of odd, I think. There are some happy people in California right now.

  5. Re:I've seen that before... by Cato · · Score: 2

    The big difference is that Iridium was based entirely around low-bandwidth, high-cost mobile voice connections, while optical internetworking is aligned with the trend to converged voice+data networks, and for my money is a good investment. Not sure about the $7bn price tag, but it could well turn out to be reasonable if Cisco sells enough optical kit based on this technology.

  6. Re:Cisco certs by anticypher · · Score: 2

    The high-end cisco certifications are based not on a simple paper test, but on a two day demonstration of your knowledge of designing, building and debugging a modern network. There is a 40% to 60% fail rate for first time testers. When you pay your $1000 for the test, they sit you
    in front of $1million worth of equipment and give you a handfull of assignments to complete in 8 hours the first day. There is so much to be
    done you don't have time to look anything up in the documentation except for a few rare commands.

    Companies who rely heavily on their networks will pay twice the market rate for a CCIE badged engineer over one with equivalent work experience. When a CCIE walks in the door, they know everything from cabling to major routing protocols, and not just IP protocols but SNA, appletalk, decnet, IPX, and others.

    I was a paper CNE, I passed after only 2 days of study and one practice install. I spent 6 months preparing for my CCIE, and that almost wasn't
    enough. I have access to a pile of cisco equipment and spent 5 to 20 hours per week working on scenarios. You don't just get one of these by
    reading a few books.

    There are only about 4000 CCIEs in the world right now, its a pretty elite clique. When you get the top cert, you can literally name your price :-)

    the AC

    --
    Hemos is like...sci-fi fans;he thinks technology is cool, but he hasn't bothered to understand the science it's based on