Cisco Systems has committed certain technology and $50 million of funding to Nuova Systems, a start-up based in Santa Clara, California, with the possibility of up to $42 million in additional funding in the future. The subsidiary will be approximately 80% owned by Cisco, with the remaining 20% interest held by employees of the subsidiary. Sales from the subsidiary will be consolidated with the accounts of Cisco starting in fiscal year 2007.
Cisco said it made the investment in Nuova to accelerate next-generation product development in the data center. Nuova Systems’ product development efforts will complement Cisco’s current data center product portfolio which includes the Catalyst 6500, Cisco’s core enterprise networking platform, the MDS line of storage switches, SFS server networking switches and application networking solutions for accelerating applications within the data center and to the rest of the enterprise.
Cisco has the option to purchase the remaining 20%. The potential payouts made under the call option are primarily based on the success of Nuova Systems’ products sold through Cisco, with a minimum potential payout of $10 million and a maximum total payout of $578 million.
Nuova Systems, which has not yet announced any products or plans, has 76 employees and is based in Santa Clara, California. Nuova Systems’ founders include former Cisco executive Mario Mazzola.
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- In July 2005, Cisco Systems named Charles H. Giancarlo as chief development officer, replacing Mario Mazzola who retired from Cisco after serving over 12 years in engineering leadership roles.
