Cisco Jumps on Jahi

Cisco Systems Inc. (Nasdaq: CSCO) has stumped up $16 million to acquire Indian network management specialist Jahi Networks Inc.

Although that amount of cash is barely a sneeze in the handkerchief for Cisco, its worth noting that Jahi only has 20 employees. This means that the deal is worth $800,000 per Jahi staff member.

The smallish vendor, which is based in Hyderabad, India, and San Jose, Calif., specializes in network management appliances. Founded in 2003, Jahi has been marketing its technology as a means to integrate different network products and support security policies.

In addition to Jahi’s technology capital, Cisco also gets a toe-hold in the potentially lucrative Indian market. Earlier this year, Lehman Brothers predicted that Cisco is in line to win some big contracts as the Indian data services market grows (see Lehman Says India's Hot Stuff).

The Jahi deal also shows that Cisco is back on its well trodden acquisition trail -- specifically for very small companies; it has been all of four weeks since the company last jumped into the M&A market. Already in 2004, the network giant has bought Perfigo Inc., Dynamicsoft Inc., P-Cube Inc., Riverhead Networks Inc., Twingo Systems, and NetSolve Inc. (see Cisco to Buy Perfigo for $74M, Cisco: It Takes Two to Twingo, and Cisco to Acquire Netsolve).And we are likely to see more of the same, according to industry observers, as Cisco continues to plug its technology gaps (see When Will Cisco Go Soft? and M&A Mojo).

Cisco execs say that Jahi’s technology will provide an enhanced interface for Cisco devices. It will also offer customers who are writing their own scripts and network management applications a common way of interacting with different Cisco devices running in the network, according to the network giant.

The acquisition is expected to close in the second quarter of Cisco's fiscal year 2005, when Jahi will become part of Cisco’s Network Management Technology Group.

— James Rogers, Site Editor, Next-Gen Data Center Forum