Cisco to Acquire Remaining Interest in Nuova

Cisco today announced
its intent to purchase the remaining 20 percent interest in San
Jose-based Nuova Systems, a start up focused on the development of
next-generation products for the data center market.

Cisco also
introduced the Cisco Nexus 5000 Series, the first product developed by
Nuova. The Cisco Nexus 5000 is a 10 Gigabit Ethernet "top-of-rack"
switch that offers unified fabric capabilities through the support for
multiple data center networking protocols and software intelligence.

Prior to the acquisition, Nuova operated as a majority-owned
subsidiary of Cisco, which had invested $70 million and owned 80
percent of the company. Cisco announced its initial investment in Nuova
in August 2006 and announced an amendment to the agreement in April
2007 that expanded the development scope, increased the funding
commitment and raised the maximum potential payout of the transaction
to $678 million.

The Nuova transaction is success-based with the total value
primarily determined by the revenue of Nuova products over three
measurement periods. The first measurement period will commence in
early fiscal year 2010, the second measurement period will commence in
late fiscal year 2010, and the third measurement period will commence
in mid fiscal year 2011.

The Cisco investment and Nuova subsidiary structure allowed both
companies to collaborate actively in the development of the Cisco Nexus
5000 through technology sharing, product evolution and driving overall
market acceptance of innovative data center technologies. As a result
the Cisco Nexus 5000 is designed to be fully interoperable with the
recently introduced Cisco Nexus 7000 Series switches through the
sharing of a common product architecture, operating system and other
software intelligence. The Cisco Nexus 7000 is an internally developed,
modular data center-class switching system designed for 10 Gigabit
Ethernet networks offering industry-leading performance scaling up to
15 terabits per second.

"To succeed in today’s marketplace and effectively deliver on our
business strategy to capture key market transitions, Cisco drives a
combination of internal R&D, industry partnerships and corporate
development activities," said Ned Hooper, senior vice president,
Corporate Development and Consumer and Small Business Group, Cisco. "In
many ways, the efforts supporting our Data Center vision are great
examples of this ‘build, buy, partner’ innovation framework in action."

Nuova was founded by Ed Bugnion, Luca Cafiero, Prem Jain, Soni
Jiandani, Tom Lyon and Mario Mazzola. Bugnion is a former co-founder of
VMware and Lyon formerly founded Ipsilion Networks. Cafiero, Jain,
Jiandani and Mazzola are all former Cisco executives. All six founders
and the company’s approximately 200 employees in San Jose and in
Beaverton, OR are expected to join Cisco to continue working on data
center-related projects.

Nuova will operate as an independent business unit led by Cafiero,
Jain and Mazzola who will all report into John Chambers, Cisco’s CEO
and chairman. In addition, to help ensure alignment with Cisco’s
development priorities, Jain has been appointed as the ninth member of
the development council in Cisco’s Development Organization, joining
Tony Bates, Marthin DeBeer, Kathy Hill, Ned Hooper, Pankaj Patel, Don
Proctor, Manny Rivelo and Jayshree Ullal.

"Cisco’s decades of switching innovation and expertise have it well
poised to be the architect of the next-generation, network-centric data
center, a vision defined as Data Center 3.0," said Mazzola, who is
president and CEO of Nuova Systems. "We expect the Nuova team to make
significant contributions toward the realization of this vision through
products and technology that help enable data center consolidation and
virtualization, while protecting customers’ current data center
investments."

The acquisition is expected to close in Q4 of Cisco’s FY 2008. It
will be acquisition No. 126 for Cisco overall and the fifth one in FY
’08.

Cisco

Nuova Systems