Cisco, just buy Calix already

Isn't it time for Cisco Systems to just go ahead and acquire Calix?

Industry prognosticators have been speculating about this combination for at least four years, starting a year before Calix even exited stealth mode. Cisco has thus far played hard to get, but what's getting even harder is ignoring the argument for acquisition.

Cisco has been shoring up elements of home networking and video with the goal of building an end-to-end offering. But it still lacks a passive optical network (PON) platform. Calix is the world leader in Gigabit PON, thanks to its acquisition of Optical Solutions. And Cisco reportedly partnered with Optical Solutions to pursue a Bell PON deal in 2003.

Cisco has plans to become a more intimate strategic partner to carriers, offering turnkey solutions to enable new services. Such turnkey offerings are perhaps most appealing to the independent rural telcos that comprise most of Calix's sizable customer base. In addition, Calix's gear is already compatible with Cisco's Scientific-Atlanta set-top boxes.

This week Cisco made a hard drive at Calix's rural telco base by combining its own gear and professional services with SES Americom's IPTV content package for a more cohesive, comprehensive IPTV offering.

Calix CEO Carl Russo has sold out to Cisco before — he stayed with Cisco for a spell after it bought Cerent Networks from him for $7 billion in 1999 — and last month 10-year Cisco veteran Don Listwin joined Calix's board. Perhaps in the realm of trivia, the ties go even deeper: A former Cisco employee pled guilty in 2001 to improperly sharing with a then-nascent Calix the proprietary optical networking information he'd copied from Cisco's offices the day before he left the company.

When it comes to general M&A philosophy, Cisco has an aversion to mega-mergers á la Alcatel-Lucent, but it has a long track record of absorbing smaller firms like Calix.

So come on, Cisco. What are you waiting for? I dare you.