Cisco Buying PixStream--No. 17 Acquisition For 2000

Networking giant Cisco Systems is expanding its broadband services by acquiring PixStream Inc., which makes software and hardware that manage digital video across broadband networks. The all-stock deal, which is subject to regulatory approval, is valued at $369 million.

Using PixStream's hardware, software, and engineers, Cisco would be able to offer its customers what it says is broadcast-quality video on demand and multiplayer games over digital subscriber line, cable, and broadband wireless networks.

PixStream was an attractive buy for Cisco, because its streaming video products are complimentary to those of V-Bits, a supplier of digital video-processing systems that Cisco acquired last November, says DataQuest analyst Kathie Hackler.

The PixStream acquisition helps Cisco bring streaming video to businesses without being limited by the lack of a cable infrastructure in a business environment, Hackler says. "Cable systems are commonly viewed as residential entertainment, but now with the prospect of streaming-video content that might be suitable for business, it makes sense to bring video into the business environment."

Through the acquisition, expected to close by October, PixStream's 156 employees would become part of Cisco's service-provider unit.