Cisco Systems to Acquire Calista Inc.; Technology Allows Different Business Phone Systems to Work With Internet Phone Systems - Company Business and Marketing

Cambridge Telcom Report, August 23, 1999

Cisco Systems, Inc. Monday announced a definitive agreement to acquire privately-held Calista Inc. in Bucks, England and San Jose, Calif. for $55 million in stock.

Calista is a leading developer of Internet technology that allows different business phones to work together for the first time over an open Internet-based infrastructure.

This acquisition is significant because it offers investment protection for business customers while allowing enterprises to seamlessly transition from circuit-based PBX phone systems to Internet-based PBXs. This acquisition also supports Cisco's strategy to enable new IP-based data, voice and video services, such as unified messaging, over an open, Internet-based infrastructure.

Under the terms of the agreement, Cisco common stock will be exchanged for all outstanding shares and options of Calista Inc. The acquisition will be accounted for as a purchase. The transaction is expected to close in the first quarter of Cisco's fiscal year 2000 and will result in a one-time charge of approximately $.01 per share on an after-tax basis for purchased in-process research and development.

Cisco is acquiring Calista Inc. to equip large businesses with Internet technology that allows legacy phone systems from different vendors to work together with Internet-based PBXs for the first time. This technology works at the network layer by emulating the closed PBX architecture of different digital phone manufacturers for large businesses.

Using Internet Protocol (IP) as the 'lingua franca' between different legacy phone systems, this technology allows Cisco to mix and match Internet-based phones with legacy digital phones inside large companies.

This acquisition builds upon Cisco's Internet-based voice architecture for large businesses. It delivers more choice, lower communication costs and investment protection for Cisco business customers. For example, the new Internet technology delivers the benefits of integrated data and voice networks without compelling customers to immediately throw away their legacy phone equipment.

Calista Inc. was founded in 1995. Calista President & CEO Mark Richer will continue to lead his team, with sales and support in San Jose and research and development in United Kingdom. Richer will report to Prem Jain, vice president and general manager in the enterprise line of business.

Cisco Systems (Nasdaq:CSCO) is the worldwide leader in networking for the Internet. Cisco news and information are available at http://www.cisco.com.