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 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.
Earlier this week VMware launched the vSphere “cloud operating system.” The new service attracted the likes of Michael Dell (Dell Inc. CEO), John Chambers (Cisco Systems CEO), Joe Tucci (EMC CEO), and Pat Gelsinger (Intel SVP) to the announcement meeting. Cisco was one of the first companies to work with VMware on the data center expansion. Intel has been a VMware partner for quite some time. And Dell plans to switch to get into the virtualized computing environment.
In conjunction with the launch of vSphere, EMC has launched a path management system software called PowerPath/VE. PowerPath is a software that finds the most optimal I/O path for data traveling through applications and storage resources.
vSphere is able to manage 64 processor cores in one server. VMware’s last system could support only 32 cores. Every day cloud computing is expanding and keeps pushing the limit.
