Cisco to buy VoIP gear maker Sipura

Cisco Systems has agreed to acquire VoIP (voice over Internet Protocol) vendor Sipura Technology for integration into its Linksys Group division, the networking giant announced Tuesday.

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Cisco will pay about $68 million in cash and options for privately held Sipura, which was founded in 2003 and is based in San Jose, California, according to Cisco. The deal is subject to standard regulatory approvals and is expected to close in Cisco's fiscal fourth quarter, which ends July 30.

The acquisition is the first that Cisco has made for Linksys since it bought the Irvine, California-based home and small-business network vendor in 2003. It will beef up Linksys' research and development team, said Linksys Co-Founder and Senior Vice President Victor Tsao. Sipura's 12 employees will go to work for Linksys, 11 of them in engineering, he said. Sipura also has four contractors who may also come to Cisco. The team eventually will work at Cisco's San Jose, California, headquarters.

Currently, Linksys has a research and development team of about 30 people, Tsao said.

The core of Sipura's product line is analog terminal adapters (ATAs), which lets users connect conventional phones to a broadband service to use VoIP. Linksys already uses Sipura technology in some of its most popular VoIP equipment, including certain ATAs and wired and wireless routers, according to a company statement. After the acquisition closes, the company plans to rebrand and keep selling Sipura's products initially, but its next goal will be to integrate the companies' product lines, Tsao said.

Sipura has established interoperability with many brands of VoIP infrastructure, including that of Nortel Networks, Tsao said. That interoperability will continue because it is based on SIP (Session Initiation Protocol), the signalling protocol that is being generally adopted by the industry, he said.

Linksys is a leading vendor of consumer VoIP gear in the U.S., with partnerships with service providers such as Vonage Holdings and AT&T, said Norm Bogen, an analyst at InStat, in Scottsdale, Arizona. On the world stage it is a rising star, expanding its presence in Europe and Asia through its parent company's powerful channel relationships, he said.

"I think their chances of expanding their business outside the U.S. is good because of who they are now [as a Cisco subsidiary]," Bogen said.

InStat estimates that there are about 8 million VoIP subscribers worldwide who use an ATA of some kind, Bogen said. The key to the market is relationships with service providers that currently represent the main channel to consumers, Bogen said. Sipura itself is a supplier to some large service providers, such as Bell Canada Enterprises, according to Linksys' Tsao.