Cisco acquires Allegro Systems

In its second acquisition in almost as many weeks, Cisco today announced it would buy privately owned Internet networking company Allegro systems for $181 million in stock.

Allegro develops acceleration technology for virtual private networks, adding to Cisco’s current product line of VPN gateways, concentrators, firewalls and security systems. Cisco officials said acceleration technologies increase throughput speeds across the public Internet between a corporate network and a remote terminal. Allegro, based in Milpitas, Calif., has 39 employees.

“”We’re basically adding VPN acceleration to the picture,” a Cisco spokesman said today. “Not that we don’t have our own VPN acceleration, but Allegro has a very interesting technology--one that we wouldn’t mind incorporating onto our product line.”

Despite the current market anathema to mergers and acquisitions, Cisco has gone on a miniature buying-spree during the last month. On July 11, Cisco scooped up AuroraNectics, a privately held firm developing 10 Gbps optical networking technology. While Cisco has only purchased two companies this year--down from the dozen it bought last year--the Cisco spokesman said the company is always considering acquisitions to complement its current product and technology offerings.

Cisco expects a one-time charge for the acquisition not to exceed 1 cent per share. The deal is expected to close in the first quarter of 2002 fiscal year. Allegro CEO Mano Murthy and Chief Technology Officer Ashwath Nagaraj will join the VPN and Security business unit in Cisco’s enterprise division.