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Networking giants announce acquisitions

To shore up prospects in growing markets, both Cisco and Nortel are making purchases in areas of increasing importance to each.

Two major networking vendors are looking to capitalize on opportunities in tangential markets via acquisitions.

Cisco Systems Inc. today announced its intent to Internet-enable standard phone devices with the purchase of privately held Sipura Technology Inc.

Cisco's Linksys division already uses Sipura software in some products, but it agreed to lay down $68 million in cash and options for the San Jose, Calif.-based company.

Sipura develops VoIP end-point products specifically designed for large-scale VoIP deployments. The vendor also incorporates technologies such as SIP, HTTPS, XML and toll-quality voice coding algorithms for service providers and systems integrators.

Cisco acquired Linksys in June 2003 for $500 million, and said it is now capitalizing on the growing demand for Internet-calling services.

Using acquisitions to enter emerging markets is not a new concept for Cisco. The company made many such acquisitions over the years. Last year alone, its 12 acquisitions were worth a total of approximately $805 million.

For more information

Read our exclusive on Cisco's recent acquisition of Airespace.

Learn more about Nortel's financial struggles.

Separately, Nortel Networks Ltd. announced plans to acquire Fairfax, Va.-based PEC Solutions Inc. in a $448 million deal.

PEC Solutions is a systems integrator and offers technology consulting for government agencies, including the FBI and the Department of Defense.

Nortel, a Canadian telecommunications gear vendor, said it plans to create a new company called Nortel PEC Solutions and aims to provide services to U.S. federal, state and local governments.

The announcement may be proof that Nortel is intent on moving past recent financial difficulties, most notably last year's accounting scandal. Internal reviews revealed 2003 earnings were overstated by $300 million, and an additional $3.2 billion in false sales were later discovered in a subsequent audit.

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