Cisco invests $50 mn in Nuova to devp Data Centre

New Delhi, Aug 11: California-based Cisco Systems Inc, today said it has invested 50 million dollars in Nuova Systems Inc, to accelerate next-generation product development in the data center, making it a majority-owned subsidiary of itself.

Cisco has committed certain technology and 50 million dollars of funding to Nuova Systems with the possibility of up to 42 million dollars in additional funding in the future.

The subsidiary will be owned nearly 80 per cent by Cisco, with the remaining 20 per cent interest held by employees of the subsidiary.

Due to Cisco's majority ownership interest, the accounts of the subsidiary will be consolidated with the accounts of Cisco starting in fiscal year 2007.

As part of the agreement, Cisco has the option to purchase the remaining 20 per cent interest in this subsidiary, and should Cisco decide to exercise this option, the transaction would occur late in 2008 or in early 2009.

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 dollars and a maximum total payout of 578 million dollars.

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.

UNI