Cisco Systems (CSCO) on Tuesday agreed to buy privately held Luxtera, a maker of silicon photonic devices used in high-speed communications networks, for $660 million in cash. Cisco stock fell a fraction on Tuesday though the Nasdaq gained.
XReports surfaced last week that Cisco was in talks to buy Luxtera, a rival of Intel (INTC). Broadcom (AVGO) and Intel reportedly also were interested in acquiring Luxtera, said one report.
Luxtera's optical devices go into communications networks in internet data centers. Aside from Carlsbad, Calif.-based Luxtera and Intel, other makers of silicon photonic devices include Elenion Technologies and Sicoya. Silicon photonic devices integrate optical light switching and semiconductor technology.
Competition Intensifies
"Coupled with our silicon and optics innovation, Luxtera will allow our customers to build the biggest, fastest and most efficient networks in the world," David Goeckeler, executive vice president of Cisco's networking and security business, said in a news release.
Cisco is shifting away from its core business of selling network switches and routers. Through acquisitions, Cisco aims to increase revenue from software and services.
"While this (Luxtera deal) is a slight change from Cisco's history of purchasing software/security assets, we think the strategic fit is sound," RBC Capital analyst Mitch Steves said in a report to clients.
Cisco stock slipped 0.3% to close at 44.06 on the stock market today.
Cisco is a high-dividend paying stock. Amid much volatility in the technology sector, Cisco stock has formed a cup-with-handle chart pattern. Cisco has an entry point of 48.54.
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