Cisco Systems agreed to acquire Scientific Atlanta for $43 per share in cash — a deal valued at approximately $6.9 billion — providing it with a large installed base of set-top boxes and video transmission systems among cable operators as well as a triple play solution for carrier networks and the digital home.
“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, president and chief executive officer of Cisco Systems. “As consumers demand more sophisticated information and entertainment services in their home, tightly coupled applications, devices and networks will be essential. The collective strength of Linksys and Scientific-Atlanta will extend Cisco’s leadership position across the entire networked digital home.”
Earlier this year, SBC awarded a $195 million, multi-year contract to Scientific-Atlanta to provide IP-based video equipment for Project Lightspeed in its 13-state service area. Scientific-Atlanta will supply IP video equipment for an IP video operations center (VOC), two national IP video super hub offices (SHO) and 41 IP video hub offices (VHO). Scientific-Atlanta will provide encoders, satellite dishes, video routers, and professional services as part of the contract. Scientific-Atlanta will also provide professional services related to the initial design and builds of the VOC, SHOs and VHOs.
The IP video operations center will serve as a command center, monitoring the availability and quality of all of the content traveling through SBC’s network using Scientific-Atlanta’s ROSA Element Manager system. The super hub offices (SHOs) receive, process, and encode video and TV programming from satellite feeds into IP packets. This content is then sent to the video hub offices (VHOs), typically one per major metropolitan area, via SBC’s national IP-based network. In the VHOs are servers that have the electronic intelligence necessary to deliver IP video-on-demand, over-the-air TV programming, interactive applications, etc. The VHOs will also acquire and encode local video content.
Following the close of the transaction, Scientific-Atlanta will become a division of the Routing and Service Provider Technology Group under the leadership of Cisco Senior Vice President Mike Volpi.
Scientific-Atlanta was founded in 1951 and currently has more than 7500 employees. For FY2005, which ended July 1, 2005, Scientific-Atlanta reported revenues of $1.91 billion.
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- Scientific-Atlanta and Microsoft announced that they are working together on IPTV set-tops for supporting initiatives such as SBC’s Project Lightspeed. The new line of Scientific-Atlanta IP set-tops, which will be integrated with the Microsoft TV IPTV Edition software platform, will support advanced codecs such as MPEG-4 Part 10/H.264 and VC-1 and will include standard- definition (SD), high-definition (HD), and whole home SD/HD digital video recorder (DVR) devices, as well as innovative gateway products that can serve an entire home with a single device. Additionally, Scientific Atlanta said these new set-tops will support a “no new wires” strategy for operators, which will enable IP video to be delivered over existing coax cable already installed in millions of homes.
- SBC Communications has awarded IPTV set-top box contracts to both Scientific-Atlanta and Motorola. The contracts, awarded by SBC Services Inc., give equal market opportunity to both vendors and continue through the end of 2008. SBC provided a common set of specifications to both vendors to build the set-top boxes. At this time, SBC said it expects to use Motorola set-top boxes initially when it scales the service, with Scientific-Atlanta set-top boxes soon thereafter.
- In September 2005, Scientific- Atlanta completed the acquisition of all outstanding interests in the Scientific- Atlanta Shanghai Limited joint venture from the other shareholders. Going forward, Scientific-Atlanta (Shanghai) Company Ltd. will function as a wholly owned subsidiary of Scientific-Atlanta China, Inc. The company will continue to use the extensive marketplace knowledge acquired during the 12 years of the joint venture’s operation as it focuses on research and development of digital technology for the burgeoning China market and extending that technology for applications all across Asia.
- Also of note, Scientific-Atlanta resells Tropic Networks’ intelligent wavelength transport platform to cable operators under an OEM deal. Tropic Networks, which is based in Ottawa, Ontario, Canada, developed a Reconfigurable OADM (ROADM) that enables service providers to remotely reconfigure add and drop capacity at each node. Tropic’s system features an advanced optical layer management technology called “Wavelength Tracker”.
Price reflects valuation at the time the
deal was announced.
| Scientific Atlanta | set-top boxes and video transmission systems for cable operators and IPTV | $6.9 billion | Nov 05 |
| Nemo Systems | network memory technology to enhance performance of core switching platforms | $12.5 million | Sep 05 |
| Sheer Networks | network virtualization technology | $97 million | July 05 |
| KiSS Technology A/S | networked entertainment devices | $61 million | July 05 |
| NetSift | deep packet processing | $30 million | June 05 |
| M. I. Secure Corporation | security and VPN solutions | $13 million | June 05 |
| FineGround Networks | Bandwidth optimization appliances | $70 million | May 05 |
| Sipura | VoIP customer premise equipment | $68 million | Apr 05 |
| Topspin Communications | server networking equipment designed for grid and utility computing | $250 million | Apr 05 |
| Airespace | WLAN controllers, Access Points, WLAN Management and Location Software, and Security capabilities | $450 million | Jan 05 |
