According to BusinessWire, Cisco Systems, Inc. has acquired Scientific-Atlanta, Inc. Scientific-Atlanta is a global provider of
set-top boxes, end-to-end video distribution networks and video system integration. According to the release, "The combined entity creates a world class, end-to-end triple play solution for carrier networks and the digital home. In addition, upon closure, the market opportunities represented by this acquisition will become part of Cisco's Advanced Technology portfolio."
With Cisco playing "nice" with Microsoft using ICE, this is an interesting acquisition by Cisco. For instance, Microsoft designs the software for SBC's cable set-top box called Microsoft TV IPTV Edition software. But it gets better - Scientific Atlanta sells their set-top boxes to SBC running - you guessed it - Microsoft TV IPTV Edition software. So will Cisco "pull" support for the Microsoft TV IPTV Edition software and install their own software? Or will Cisco let Microsoft own the software and focus strictly on the hardware side?
Sure, Microsoft and Cisco "played nice with ICE", but they are still fierce competitors. It will be interesting to see what happens. The Battle of the Titans for the family room could be fun to watch.
Under the terms of the agreement, Cisco will pay $43 per share in cash in exchange for each share of Scientific-Atlanta, and assume outstanding options, for an aggregate purchase price of approximately $6.9 billion, or approximately $5.3 billion net of Scientific-Atlanta's existing cash balance.
Update:
Just noticed Rich Tehrani had some insights about the Cisco / Scientific Atlanta acquisition worth sharing.
Cisco acquires Scientic Atlanta set-top box company
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Some interesting comments from Infonetics...
"Cisco's acquisition of Scientific-Atlanta is their largest acquisition since Linksys two years ago, and a very significant one. Most of Cisco's acquisitions are technology buys where there's very little market share. In this case, Cisco is investing into an adjacent market, buying both market share AND technology in the hot IPTV market, which we forecast to reach $44 billion and 53.7 million subscribers worldwide by 2009. With Scientific-Atlanta's cable set top boxes, Cisco strengthens their position in the service provider video market with both cable and telco providers. Video is the killer app of triple-play, and mobility is the killer app of quadruple play. Cisco now has both. Quadruple play is going to be huge. Video will go mobile from TV to PC to PDA to phone. You can watch any movie you want via video on demand at an airport during a long layover, or talk to -- and see -- your grandkids while you're on a train. Your triple play basically follows you wherever you go. Not only can you personalize your voice, video and data, but you can do it wherever, whenever you want."
Michael Howard, Principal Analyst and Co-Founder, Infonetics Research
"The cablecos and telcos are interested in IPTV not only for the much stated reasons of being part of the digital IPTV revolution wave, or for competitive reasons, but also for the potentially nefarious knowledge of the details of each consumer click-to-video data. The information provided by IPTV consumer clicks can be used by clever marketers to sell and market to ever more finely grained sub micromarkets."
Jeff Heynen, Directing Analyst, Broadband and IPTV, Infonetics Research