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S-A to retain independent spirit post-merger

Tue, 02/28/2006 - 6:00am
Jeff Baumgartner, CED

Although Scientific-Atlanta (S-A) has been absorbed by Cisco Systems in a deal valued at $7 billion, S-A will retain a good portion of its independence, company officials said Monday.

Suraj Shetty, director of marketing for Cisco's routing division, said the acquisition will share similarities with Cisco's purchase of Linksys, which has maintained its brand and much of the corporate structure it enjoyed prior to becoming part of Cisco.

Shetty said no layoffs are expected as a direct result of the merger, and noted that S-A's senior management has agreed to stay on for two years to ensure a smooth transition. About 8,000 S-A employees have joined Cisco, which now has more than 47,000 employees.

Because the deal was just consummated, Cisco is not yet ready to discuss how Linksys might fit into a retail strategy for digital set-tops. Linksys, however, will certainly provide a key voice in how set-tops move content around the home and to different devices.

Other questions related to integration and product overlap still need to be addressed. S-A and Linksys, for example, both sell DOCSIS-based consumer premises equipment. S-A, however, has stronger relationships with broadband service providers, and Linksys has a much better retail presence.

"It's a nice position to be in," Shetty said. "We have options...but we're not ready to make a specific announcement on how we're going to move forward."

Looking at the bigger picture of the agreement, Cisco hopes to tie together its own IP "DNA" with S-A's video expertise and Linksys' networking proficiency. That means delivering video and other content to more than just TV screens and moving the "trusted domain" component of the set-top to other devices, Shetty said.

Although cable operators have a large installed base of MPEG video transport to consider, they are also migrating to IP-delivered video, especially when it comes to niche, "long tail" content, added Daren Mallard, general manager of business development at S-A. 

Cable won't enlist a "hard cut" to IP and MPEG-4, but operators will use switching and other IPTV techniques to deliver content that doesn't require another broadcast channel, Mallard explained.

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