Cisco Systems, Inc. (NASDAQ:CSCO) will be acquiring DVN (Digital Video Networks) for $44.5 million. Of that $44.5 million, $17.5 million will be paid up front and the rest of the $27 million will be paid based on sales performance. The deal is expected to close by the first half of 2010. DVN has about 160 million subscribers and the company plans to grow by another 200 million customers in the next 3-5 years. DVN will be rolled into Cisco’s International Cable Unit division.

Earlier today Cisco announced that their first quarter profit dropped 19% because of a drop in sales. However Cisco CEO John Chambers said that there are “strong sequential growth trends” as the economy is recovering. The profit posted was $1.79 billion for the quarter. This is down from $2.2 billion the year before. Cisco has recently partnered with VMware and EMC to sell data center products. Cisco plans to repurchase $10 billion worth of stock.

Cisco Systems, Inc. (NASDAQ:CSCO?) issued a statement that they will be buying Starent Networks for $35 per share ($2.9 billion total). Starent Networks makes products that allow wireless telecommuncations to control large sums of data being sent to phones and computers.

The Starent deal was worth a 20% premium over the stock closing price on Monday. Starent customers include Verizon, Vodafone, China Telecom, and Sprint Nextel. “We have had a huge explosion in data traffic,” stated Cisco chief strategy officer Ned Hooper. “We expect the market for mobile data to double every year through 2013.” Cisco is also predicting that video data will be about 60% of the data traveling on mobile networks.

Cisco has been on an acquisition binge lately. Two weeks ago Cisco made an offer to buy out videoconferencing company Tandberg for $3 billion and Pure Digital Technologies (maker of Flip video cameras) for $590 million. Cisco has the most amount of cash on hand for acquisitions than any other technology company. Cisco has $35 billion.

Starent is based in Tewksbury, Massachusetts and was founded in 2000. Starent had a 74% revenue rise to about $254.1 million last year. The acquisition deal is expected to be completed by 2010 in the first half.

Debra Chrapaty was the head of the infrastructure business over at Microsoft Corporation (NASDAQ:MSFT). According to AllThingsD sources, Chrapaty left the company to join Cisco Systems as the corporate VP of Global Foundation Services. Chrapaty was one of the very few women executives over at Microsoft. She worked at the software giant for 7 years.

When Chrapaty was working at Microsoft she was in charge of Microsoft Live, Cloud and Online Services worldwide. She also managed over 200 Microsoft portals. At Cisco, Chrapaty will be responsible for the collaboration software group.

Chrapaty will be filling in the shoes for Doug Dennerline, who recently left for Salesforce.com. Dennerline now works as the EVP of Sales for the Americas at Salesforce.com.

Chrapaty used to be the CTO of the National Basketball Association. She also worked at Organic, AllBusiness, and E*TRADE.

San Jose, California based manufacturing company Cisco Systems Inc. is investing a large amount of money into SkyLake, a South Korean based private equity investment firm.  So far Cisco has invested $32 million and they plan to invest a total of $2 billion as part of a 5 year strategy in the technology sector for SkyLake.

Some of SkyLake’s recent investments include Viatron Technologies, DASAN Networks (Nokia Siemens subsidiary), and Wemade Entertainment Company.  The investment made by Cisco shows the company’s intentions to globalize.  Cisco has a high interest in creating a higher presence in the Asia-Pacific area.

Cisco reported their fourth quarter earlier this week and as analysts expected, they were down.  Sales were $8.5 billion which was down 18% year-over-year, but in the earnings report Cisco CEO John Chambers said that he is starting to see positive signs in the economy.

“Cisco delivered very solid quarterly and annual results in a challenging economic environment, as we continued our focus on disciplined execution and our customers’ success,” stated Cisco Chairman and CEO John Chambers. “We are confident in our strategic position in both existing and thirty adjacent markets. We saw a number of positive signs this quarter in the economy and in our business, especially comparing our sequential quarter-over-quarter order trends. If we continue to see these positive order trends for the next one to two quarters, we believe there is a good chance we will look back and see that the tipping point occurred in our business in Q4.”

According to Kaufman Brothers analyst Shaw Wu, Cisco is showing some impressive month-to-month progress, but year-over-year comps will definitely be tough.  Cisco also reported a 46% drop in earnings.

[via Cisco PR/BusinessInsider/WSJ]

Philip Gabriel Pettersson had stolen source code for Cisco Systems’ Internetwork Operating System (ION) software several years ago and now he has been indicted.  The charges are one count of intrusion and two counts of misappropriation of trade secrets.  Pettersson also intruded NASA.  The indictment was set up by attorney Joseph Russoniello and The U.S. Department of Justice.  The FBI handled the investigation of the crimes.

Cisco’s ION software handles packet routing and the source code was posted briefly on a Russian website. “Stakkato” was the hacker name selected by Pettersson.  If charged, Pettersson could face 10 years of prison, three years of supervised release, and a fine of $250,000.

[via PCW]

Sun Microsystems (NASDAQ:JAVA) is now utilizing the Intel Nehalem microarchitecture in a new line of servers they have released called NEM.  This move directly competes with Cisco Systems.  Sun also unleashed a new line of servers that contain the Intel Xeon 5500 processors built on Nehalem.  This is the first time that Sun is using flash storage combined with microprocessors, thus reducing latency through the boost of input/output speeds.

These servers have a 24GB capacity and works through the conjunction of hard disk drives and solid-state drives.  The NEM servers sold by Sun will work with existing and new servers.  The flash storage module connects to a chassis blade through a PCI Express backplane.  The cost of the NEM servers are about $4,999.  The flash storage modeuls ranges from about $1,488 to about $8,779.

[via InformationWeek]

Xobni is an e-mail plugin that gives Microsoft Outlook more social features and has a better search for the system.  The company is exiting out of beta and has raised a second round of funding.  The company raised $10.5 million in funding from Cisco ($5 million) and the BlackBerry Partner Fund ($3.2 million).  All of Xobni’s previous investors also participated.

Xobni is currently developing a software update that focuses on performance and compatibility.  The software will have caching and performance tweaks so that Outlook’s speed is not affected by message switching.  The software update will also make the software compatible with other Microsoft products such as Dynamic CRM and Outlook Business Contact Manager.

Xobni still has yet to break even and profit.  However the company plans on announcing a premium product this summer and paid online services.  Xobni is a Y-Combinator company.

[via CNET]

Intel CEO Paul Otellini was on a Webcast earlier this week to discuss the company’s stock options program.  The subject of IBM’s interest in Sun came up during the Webcast and Otellini gave his two cents about the Java-producing company.  One employee asked Otellini whether Cisco’s entrance to the storage market drove Sun to seek a buyer.

Oh, I don’t know if the Cisco entry spurred IBM. I think (a) cheap Sun price–a low price–spurred a lot of interest. I can tell you that Sun was shopped around the valley and around the world in the last few months. A lot of companies got calls or visits on buying some or all the assets of the company. It looks like IBM is in the hunt now. And at a hundred and some odd percent premium, I suspect they’ll get it.

I don’t think it had anything to do with Cisco. I think IBM is trying to consolidate architectures. IBM has the strongest Java license in the industry. By picking up Sun–which is the creator of Java–they really consolidate their position not just in Linux, but also in Java.

I think the stuff on Solaris and SPARC is likely to see EOLs over time through the IBM acquisition. But no strategic reason for IBM to maintain that except to attempt to convert the very large Sun SPARC Solaris base to power. I think that would be their most likely strategy as part of this.

Is it good or bad for us? I don’t know. I’d rather have Sun be independent, I guess.

Those statements were published on an SEC filing on Wednesday.

It will be interesting to see who does end up buying Sun or if are forced to compete directly against Cisco. Whoever ends up buying Sun will end up owning MySQL too. MySQL is an integral part of today’s web technologies.

[via CNET]

Xobni is a San Francisco, Calif. based startup that built a platform around Microsoft Outlook.  Xobni makes it easier to find people, email, and attachments within Outlook.  Bill Gates even called Xobni the next generation of social networking.  Xobni has recently raised $7 million in Series B.  Xobni started as a Y-Combinator company then went on to raise $4.26 million in Series A.

Xobni’s Outlook software has been downloaded over 1.5 million times.  Xobni is currently doing product trials with Fortune 500 companies.  Some of the companies Xobni has partnered with includes LinkedIn, Facebook, Skype, and Yahoo!  Cisco’s investment in Xobni is an indication that they are becoming serious about enterprise email.  In August 2008, Cisco acquired PostPath, an email and calendar company for $215 million.

Prior to the $7 million investment, Xobni raised $4.26 million in funding from Khosla Ventures, Atomico, and First Round Capital.  The individuals that participated in Xobni’s first round of funding was Ariel Poler, Saar Gur, and Tom Pickney.

Background of Andreas von Bechtolsheim
Andreas (Andy) von Bechtolsheim was born in 1955 in the country of Germany.  When he was 21, he graduated Carnegie Mellon Univ. with a Master’s in Electrical Engineering.  Then he moved on to get a PhD from Stanford between 1977-1982. 

While Bechtolsheim was at Stanford, he had discovered a way to build a powerful computer based on a network connected to a Unix operating system.  Bechtolsheim created the workstation because he was bored of waiting for the computer time on the campus university system.  Vinod Khosla approached Bechtolsheim regarding his invention and they decided to start a company together, Sun Microsystems, Inc. (NASDAQ:JAVA).  Sun was actually an acronym for Stanford University Network.

Bechtolsheim dropped out of the PhD program to go full-time on Sun and pulled in his friend Scott McNealy to become a co-founder.  The four original founders of Sun were Andy von Bechtolsheim, Vinod Khosla, Bill Joy, and Scott McNealy.

Today Sun Microsystems is a $3.38 billion company.  Sun’s brands include Java, MySQL, and Sun StorageTek.  Sun bought out MySQL for $1 billion earlier 2008.

Investments/Other Startups/Back to Sun
Bechtolsheim stepped down from Sun in 1995 and then started Granite Systems.  Granite was bought out by Cisco Systems, Inc. (NASDAQ:CSCO) for $220 million in 1996.  After that Bechtolsheim became VP and GM of Cisco Gigabit Systems Business Unit.

Bechtolsheim stepped down in 2003 from Cisco to become the head of Kealia.  Sun bought out Kealia in 2004 and brought Bechtolsheim back to Sun.  Bechtolsheim became the Chief Architect and SVP at Sun.  

Bechtolsheim and David Cheriton, who both were at Granite, were two of Google’s first investors.  They wrote a $100,000 check to “Google Inc.” before the search engine company even incorporated itself.  Larry and Sergery did not even have a company checking account at the time.

The New Start-Up
Bechtolsheim stepped down from Sun again recently to work on a new startup.  This startup plans to take-on network giant and Bechtolsheim’s former employer, Cisco.  Bechtolsheim’s new company is called Arista Networks and they have built a fast network switch that costs 1/10th of the prices of Cisco’s products.

Some of Arista’s customers already include several government labs, Internet startup companies, and other data intensive companies like Google.  Today the company is also announcing that they have hired Jayshree Ullal as their CEO.  Ullal was an executive at Cisco that lead their corporate switch business.

Cheriton will also be joining Arista as the company’s chief scientist.  

Arista, based in Menlo Park, Calif. has kept their team at a small number.  This is because Bechtolsheim believes if you hire a bunch of key executives at once, they’ll just twiddle their thumbs while collecting large sums of money.  Even though the company has already been shipping units, they did not have an official CEO until today.

Don’t Forget Where You Came From
Although this is the second time Bechtolsheim is leaving Sun, he stated that he will a part-time advisor with the company.   ”It’s my baby,” Mr. Bechtolsheim said. “I will always be associated with Sun.”

Cisco Systems, Inc. (NASDAQ:CSCO) has entered a definitive agreement to buy out Jabber, Inc.  Jabber is a Denver, Colorado-based instant messaging company.  Cisco plans on integrating Jabber in their Collaboration portfolio.  This acquisition complements Cisco’s acquisition of WebEx. 

“Enterprise organizations want an extensible presence and messaging platform that can integrate with business process applications and easily adapt to their changing needs,” stated Doug Dennerline, SVP of Cisco’s Collaboration Software Group. “With the acquisition of Jabber, we will be able to extend the reach of our current instant messaging service and expand the capabilities of our collaboration platform. Our intention is to be the interoperability benchmark in the collaboration space.”

Jabber’s customers and partners include AOL’s AIM, Bank of Ireland, BT, CapWIN, Carahsoft, U.S. Department of Homeland Security, U.S. Department of Defense, Early warning, Emerald, Eyeball, GameAccount.com, Lymabean, Earthlink, Eyeball, Intelink, Me.dium, Privacy Networks, Sun, Adobe, Akamai, and Akonix.

Jabber’s IM platform supports an aggregatioin of AIM and Google Talk.  The Jabber IM platform can also support built-in Microsoft Outlook features.  Jabber IM is already compatible with WebEx, which may have been a reason why Cisco was interested in the IM platform.

Cisco Systems, Inc. has made a definitive agreement to acquire PostPath. PostPath has an online mail and calendar software that serves either as a replacement or as a supplement to Microsoft Outlook.

PostPath will be used to enhance WebEx, a video conference company that Cisco acquired last year. Cisco will also use PostPath’s email and calendar systems and improve upon the IM, voice, video, data, and document experience.

“The acquisition of PostPath complements our strategy to develop an integrated collaboration platform designed for how we work today and into the future, providing real productivity gains and a more satisfying user experience”, stated Doug Dennerline, Cisco SVP of Collaboration Software Group. “Our ‘cloud-based’ delivery model offers our customers rapid deployment and compelling economics.

As part of the agreement, Cisco will pay $215 million in exchange for 100% of the shares in PostPath. The acquisition is expected to finalize by Q1 2009. PostPath’s current employees will become part of Cisco’s Collaboration Software Group.

PostPath is based in Mountain View, Calif. PostPath will continue to support existing customers.

Related Links:
1. Cisco Press release
2. PostPath Press Release
3. PostPath.com

“This will be the largest advertising platform on Earth” stated Peter Chernin, President and COO of News Corp. on a media call that was reported on TechCrunch.  What Chernin is referring to is a future product announcement in collaboration with some of the leading media and Internet giants: News Corporation (owner of MySpace), NBC, FOX, AOL, MSN, and Yahoo!.  Advertisers that are already wanting in on the upcoming video website includes Cadbury Schweppes, Cisco Systems, Esurance.com, Intel, and GM.

“This is a game changer for Internet video,” stated Chernin. “We’ll have access to just about the entire U.S. Internet audience at launch. And for the first time, consumers will get what they want — professionally produced video delivered on the sites where they live. We’re excited about the potential for this alliance and we’re looking forward to working with any content provider or distributor who wants to take advantage of this extraordinary opportunity.”

When the video website launches, full episodes and clips of TV shows and movies like 24, Heroes, My Name is Earl, SNL, The Simpsons and movies Devil Wears Prada, Borat, and Little Miss Sunshine will appear on the website.

“This partnership is completely aligned with our continued investment in video on MSN and will allow hundreds of millions of our consumers to tune into a vast library of high-quality, safe and legal online video,“ stated Kevin Johnson, the President of Platform and Services Division at Microsoft Corporation. “Our alliance proves that you can deliver quality online video entertainment and protect intellectual property and copyright at the same time. We look forward to working together to explore additional opportunities to distribute this content across other Microsoft services and devices.”

The content will be delivered to users on News Corp.’s MySpace as well.  MySpace has 65 million users that will have access to the media content.  “The ability to embed video clips within over 160 million profile pages will empower members of the MySpace community to view, share and truly interact with some of the entertainment world’s most popular content,” stated Peter Levinsohn, President of Fox Interactive Media.

The name of the new video website is unknown, but Google executives have coined the gigantic media partnership, “Clown Co.”  I guess that is Google’s executive response to Steve Ballmer’s (CEO of Microsoft) statement: “Google built one very good business. They only have one thing they do. Everything else is sort of cute.”

Today, it was announced that Cisco Systems, one of the world’s leading routing device manufacturers has acquired WebEx, a web conferencing company. The amount that Cisco paid was $3.2 billion, an amount that eclipses some of the more recent acquisitions (i.e. MySpace for $580 million and YouTube for near $1.7 billion).

WebEx was founded by Subrah S. Iyer and Min Zhu and is based in Santa Clara, CA. WebEx has several products that include WebEx Meeting Center, WebEx Event Center, and WebEx Training Center. WebEx had acquired Intranets.com in 2005 and had announced to launch a business version of AOL Instant Messenger last year using the conference tools of WebEx.

Currently WebEx Communications, Inc. has a market cap of $2.82 billion and trades under the NASDAQ: WEBX symbol. GigaOM has some further insight regarding why Cisco would actually buy the company. In summary, Om Malik summarized that this move by Cisco is a way for them to stay competitive with Microsoft’s VOIP efforts.

Yesterday, Microsoft had announced that they had acquired TellMe. TechCrunch had speculated and then later confirmed the rumor and it was made official by a Microsoft press release.

“Speech is universal, simple and holds incredible promise as a key interface for computing,” said CEO of Microsoft, Steve Ballmer. “Tellme brings to Microsoft the talent, technology and proven experience in speech that will enable us to deliver a new wave of products and revolutionize human-computer interaction.” The price is unknown, but Om Malik mentioned that he heard a rumor that it was greater than $800 million and less than $1 billion.

TellMe was founded in 1999 by Mike McCue. McCue is also currently the CEO. According to some Wikipedia analysts, “Early venture-funded competitors included BeVocal, Hey Anita and Quack.com, which was acquired by America Online to power its competing service AOL By Phone.” Tellme has processed almost 2 billion unique calls. The company is based in Mountain View, CA.