Cisco to buy optical gear maker Acacia for $ 2.8 b to build 5G muscle

Thursday, 11 July 2019 00:00 - - {{hitsCtrl.values.hits}}

The logo of U.S. networks giant Cisco Systems is seen at their headquarters in Issy-les-Moulineaux, near Paris - Reuters

REUTERS: Network gear maker Cisco Systems Inc. said on Tuesday it would buy optical component maker Acacia Communications Inc. for $ 2.84 billion in cash, as it seeks to garner a bigger chunk of 5G spending by telecom companies.

Globally, mobile networks would need higher-capacity optical interfaces to handle a surge of data when high-speed fifth-generation network comes on line in the next few years.

Morningstar analyst Mark Cash said the acquisition will bolster Cisco’s technology for service providers upgrading to 5G and put its optical portfolio ahead of the shift toward using plug and play devices across various communication segments. According to Cisco’s Visual Networking Index https://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/white-paper-c11-741490.html, global internet traffic is projected to more than triple to 13.2 exabytes per day in 2022 from 4.1 exabytes per day in 2017. “Cisco’s optical portfolio was mainly for short range data centre connections, and now gains Acacia’s skill set in areas such as metro, long-haul, and undersea,” Cash said. Revenue in Cisco’s infrastructure platform business, which includes switches and routers, rose 5% to $ 7.55 billion in its third quarter. That business is expected to get a boost from 5G communication networks, but Cisco executives have said they do not expect an impact until 2020.

Cisco Chief Executive Officer Chuck Robbins, who took the helm in July 2015, has made acquisitions a central part of his efforts to add muscle to the hardware giant’s newer growth areas such as the cloud, internet of things and cyber security.