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Pirelli today announced a strategic alliance with Cisco Systems in optical communications. Cisco will make a 10 per cent equity investment of $100 million in Pirelli's optical components division and submarine optical transmission systems division. The agreement includes the sale of Pirelli's terrestrial optical systems business to Cisco for $2.15 billion, of which about twenty per cent is contingent on revenue targets and other performance milestones. The deal means that Cisco will inherit Pirelli's new bag of optical ticks, including its multi-wavelength optical amplifier system which the company says can amplify up to eight channels at bit rates of up to 2.5 Gbit/S. The package will help to flesh out Cisco's growing stable of networking technologies, in this case with an eye toward high-bandwidth Net access, a goal for which Cisco is of course well geared. Last month, Nortel unveiled its New World routing and IP technologies in the wake of its own optical networking developments. The Cisco/Pirelli deal will be seen by many as a response to Nortel's move by the giant of the networking industry. ® See also: Nortel raises stakes with open IP

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