Cisco Boosts IP Telephony With SignalWorks Buy

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Enhancing its Internet protocol technology, networking giant Cisco Systems will pay $13.5 million in stock to buy telecom software specialist SignalWorks.The deal, which already has the blessing of both boards, should close by the fourth quarter of Cisco’s Fiscal Year 2003.

“Ultimately, this acquisition will allow Cisco to attract new small business, enterprise and service provider customers,” said Marthin De Beer, a vice president with the San Jose, Calif., company’s enterprise voice and video unit.

The two companies already have a working relationship. SignalWorks’ Acoustic Echo Canceller (AEC) software is used by Cisco in its IP phones. About 1.5 million have been shipped, mostly to Fortune 500 firms.

In addition to a sound clarity, the application supports speakerphone capabilities, stereo sound and PC-based soft phones. These features, Cisco believes, will allow it to further penetrate the enterprise, small- and medium-sized business, and service provider managed services markets.

IP telephony allows data, voice, and video to be transmitted over a single network infrastructure. Despite the ongoing economic downturn, analysts at Synergy Research Group expect the IP telephony market to increase from approximately $900 million in 2002 to $4.3 billion in 2006.

In other Cisco news, the company announced that its directors have authorized up to $5 billion in additional stock repurchases. Previously, the board approved up to $8 billion in stock buybacks. The new program is effective immediately and has no termination date. The move was expected to lift shares of the stock in early morning trading.

For its part, SignalWorks will be folded into Cisco’s voice technology group, led by Don Proctor, vice president and general manager of Cisco’s Voice Technology Group. Founded in 1994 and based in Mountain View, Calif., SignalWorks is privately held.

The company also makes speakerphone hardware, though this wasn’t the prime attraction for Cisco.