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Cisco rewards friends with $50m investment

Nuova spins-in

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Cisco has lined up yet another "spin-in" by shelling out a $50m investment for start-up Nuova Systems.

Nuova is comprised of a number of former Cisco executives. Many of them came from Cisco's first ever acquisition Crescendo, while others were involved in Cisco's acquisition of Fibre Channel switch maker Andiamo.

The Andiamo link is key here as Cisco is repeating a past strategy of investing in a Cisco bred start-up with the right to buy. Cisco has given Nuova $50m in play money and has the option of handing the wee company another $42m investment. The start-up will now be 80 per cent owned by Cisco with Nuova's lucky employees holding the other 20 per cent, since the company was self-funded.

Details are thin on exactly what Nuova is working on, although our sources say the company has a virtualization server in mind.

"Innovation has always been at the core of Cisco's engineering and development efforts, and the company's unique approach to innovation continues to be through internal development, partnerships and acquisitions and investments," Cisco said. "Cisco's relationship with Nuova Systems is an example of how the company is able to use its investment capabilities to expand its opportunities within a key emerging area."

Should Cisco decide to buy the firm outright, the employees stand to make a bundle. After all, Cisco put in close to an $80 investment for Andiamo and then bought the firm for more than $700m, keeping its friends happy.

Cisco's noted that it could pay anywhere between $10m and $578m for Nuova, if Cisco decided to exercise its option to buy the company. ®

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