Cisco May Snap Up Navini

Cisco Systems Inc. (Nasdaq: CSCO) is now expected to make its move into WiMax before the end of the month, with Navini Networks Inc. the favorite target, according to Unstrung sources in the finance community.

Cisco is expected to buy Navini within the next few weeks, according to ThinkEquity LLC analyst Anton Wahlman and a private equity source, who asked not to be named. ThinkEquity has already issued a report saying that Navini is the most likely target for Cisco, in part because of the startup's use of "beamforming" technology for WiMax, which can help increase directional signal strengh from WiMax base-station radios. (See More on Cisco's WiMax Ambitions.)

Wahlman says Cisco will pay "between 200 million and 230 million" dollars for Navini. The Richardson, Tex.-based company has raised around $160 million in financing since its inception in 2000 and has been looking for additional equity financing this year, according to the Dallas Business Journal.

Unstrung recently reported on Cisco's interest in buying up a WiMax base-station vendor. Among the vendors that Cisco is said to have looked at are Navini, Airspan Networks Inc. (Nasdaq: AIRN), Alvarion Ltd. (Nasdaq: ALVR), and Redline Communications Inc. Other industry sources are also aware that Cisco has been sniffing around WiMax of late. (See Cisco Wooing WiMax Vendors?)

Buying a company like Navini would catapult Cisco right into the forefront of the world of WiMax infrastructure. Navini has very much kept pace with the rapid development of mobile WiMax. As well as the "smart beamforming" technology, which Navini holds several patents on, the company has added multiple-input/multiple-output (MIMO) capabilities to its Ripwave line, which helps to increase the data transfer speeds offered over WiMax.

Navini has a range of base stations that operate in the 2.3 GHz, 2.4 GHz, 2.5-2.6 GHz and 3.4-3.6 GHz bands. Such a portfolio would give Cisco the ability to operate in WiMax markets around the world. The firm's equipment is already used in networks in the U.S., Europe, and Africa. (See Navini Wins in Bulgaria and Xanadoo Boasts Subscribers.)

Navini also has customer premises equipment, WiMax modems, and PC cards. The firm has recently demonstrated its capability to run VOIP calls over mobile WiMax (See Navini, Net2Phone Target VOIP.)

Nonetheless, a Navini buyout for Cisco would likely be a first step in WiMax for the networking giant rather than enabling the vendor to dominate the market as it does with enterprise WiFi.

Cisco already dominated the enterprise networking market before WiFi arrived on the scene. As ThinkEquity's Wahlman says, the company currently "doesn't have much of a presence" in wide-area wireless. Cisco will face competitors like Motorola Inc. (NYSE: MOT), which have been working with WiMax and other broadband radio technologies for a while now.

Unstrung has contacted both Cisco and Navini for comment on the acquisition rumors. We will update with more news as soon as they get back to us with official comment.

— Dan Jones, Site Editor, Unstrung