Cisco antes up for Andiamo

Cisco Systems’ entry into storage networking was finally made official today. The company moved to acquire storage area networking switch developer Andiamo Systems for as much as $2.5 billion but as little as $0. The number will not be determined until shortly before closing.

The acquisition is really no great surprise considering Cisco’s existing 44% stake in the company and its agreement set up in 2001 that gave Cisco the right to acquire Andiamo. The deal will give Cisco the ability to “strongly support our customers storage and global networking requirements,” said Mario Mazzola, Cisco’s chief development officer.

In conjunction with the announcement today Cisco introduced its MDS 9000 multiprotocol SAN switch family, which is centered on the Andiamo technology. Although those products won’t ship until the end of this year, Mazzola mentioned Cisco has had a lot of interest from customers.

“We have seen a great deal of interest, particularly in financial services and manufacturing [sectors],” Mazzola said. The company has also seen interest in the service provider space. “A major IXC—specifically Sprint” is interested, Mazzola said.

Cisco already has IP storage and metro optical SAN connectivity products that are complementary to the Andiamo products, according to Mazzola.

Before the agreement Cisco announced today, Cisco had already invested $74 million in Andiamo to equate to the 44% stake. Cisco has also said it will fund another $100 million to the company, which is set to occur by September 2002.

Oddly enough though, the deal will not close until the third quarter of Cisco’s 2004 fiscal year, and at that time Cisco common stock will be exchanged for all outstanding shares and options of Andiamo. That late date is based on when the product will have revenue traction in the market and is based on the contract between the two companies, according to Mazzola.

The company was founded in January 2001 and has 270 employees. Those employees, including Andiamo CEO Buck Gee, will become part of the Cisco Storage Technology Group once the acquisition is completed.