Cisco Wooing WiMax Vendors?

Cisco Systems Inc. (Nasdaq: CSCO) is close to buying a WiMax base-station company in its first real dalliance with the wireless broadband technology, two industry sources tell Unstrung.

The networking giant could buy within a matter of weeks, according to one source. "It's in legals now," the source says.

Both sources agree that Cisco has narrowed it down to a shortlist of potential targets. The names in the frame are said to be Alvarion Ltd. (Nasdaq: ALVR), Aperto Networks Inc. , Navini Networks Inc. , and Redline Communications Inc.

Alvarion and Redline appear to be the favorites on list. Cisco has already had some involvement with Redline in deploying a WiMax network in Paraguay. (See Redline Wins in Paraguay.)

Alvarion's sheer size, location in Israel, and legacy portfolio may count against it; the company is considered as potentially more difficult to integrate into the Cisco organization. Despite this, Cisco is said to find Alavarion's reach into emerging markets appealing.

Any WiMax acquisition would likely see Cisco spending more than it has on recent wireless acquisitions. Alavarion, in particular, is an established public company with a market cap of $867.50 million.

Nonetheless, Cisco is clearly more interested in the prospects of WiMax than it once was. Management identified WiMax as one of the "growth markets" for the company at an analyst day earlier this month, according to Lehman Brothers .

It was not always that way. Charlie Giancarlo, EVP and chief development officer at Cisco, infamously said in 2004 that Cisco was "not interested in WiMax." (See Cisco CTO Whips WiMax.) The company still has a white paper on its site explaining why it has "no current plans" to build WiMax base stations.

Nonetheless, our sources say base stations may be just the start of Cisco's WiMax plans and that it could be planning two or three more buys to round out an infrastructure portfolio. Larry Lang, VP and GM of the mobile wireless group, is said to be particularly interested in bringing WiMax under his wing. (See Larry Lang, VP & GM, Mobile Wireless Group, Cisco Systems.)

The speculation is that a suitable femtocell maker and a WiMax Access Services Network (ASN) Gateway vendor could also be on the menu for Cisco. Sources have already said Cisco is working on suitable femtocell technology. (See Cisco WiMax Buzz Grows.)

Cisco, Alvarion, and Redline haven't returned calls about any acquisition talks.

— Dan Jones, Site Editor, Unstrung