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Cisco charges the tube with $6.9bn set-top-box buy

Scientific-Atlanta opens video portal

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Cisco has agreed to plunk down a whopping $6.9bn for Scientific-Atlanta, hoping to take a major share of the set-top-box market and push video efforts.

The networking giant will pay $43 per share in cash for Scientific-Atlanta ($5.3bn) and swallow $1.6bn in debt. With the buy, Cisco acquires one of the more dominant set-top-box makers. In addition, it pushes well beyond the data center to touch consumers where they live.

"Video is emerging as the key strategic application in the service provider triple play bundle of consumer entertainment, communication and online services," said John Chambers, CEO at Cisco. "The combination of Cisco and Scientific-Atlanta brings unmatched experience and innovation in delivering large scale video systems and networks, and the addition of Scientific-Atlanta further extends Cisco's commitment to and leadership in the service provider market."

With its previous Linksys acquisition, Cisco found one route to the consumer. This purchase, however, provides a more direct avenue for delivering content and services to the home.

Cisco plans to turn Scientific-Atlanta into a division of its Routing and Service Provider Technology Group. Scientific-Atlanta has 7,500 employees and reported revenue of $1.9bn in fiscal 2005.

Cisco expects the deal to close in its third fiscal quarter of 2006, pending standard approvals. ®

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