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Cisco Systems buys software security firm Virtuata

Published: 04:15 17 Jul 2012 AEST

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Computer networking giant Cisco Systems (NASDAQ:CISCO) announced Monday it has acquired privately held network security firm Virtuata.

In an effort to provide its clients with a more secure data network, Cisco will consolidate the Virtuata team into its own data center group. The purchase of Virtuata gives Cisco access to new tools related to cloud computing and data-center infrastructure.

Financial details of the deal weren't disclosed.

Cisco has been busy since restructuring last year to target core product areas like routing and switching gear that transfers data between computers.

Since 2010, the company has made quite a few strategic acquisitions, to meet the growing demand of telecommunications and other companies for networks that support mobile and cloud computing.

The company said its newest deal "is well-aligned to [its] strategic goals to develop innovative virtualization, cloud and security technologies, while also cultivating top talent."

Cisco Systems designs, manufactures and sells Internet protocol (IP)-based networking and other products related to the communications and information technology (IT) industry, and provides services associated with these products and their use.

The company's products, which include primarily routers, switches, and other technologies, are installed at enterprises, public institutions, telecommunications companies, commercial businesses and personal residences.

In May, Cisco raised the spectre of a slowdown in technology spending, as it warned of a weaker fiscal fourth quarter. The red flag overshadowed a solid set of fiscal third-quarter earnings.

As a key maker of technology equipment, Cisco is considered to be a good gauge of swings in the global economy.

For its fiscal third quarter that ended April 28, Cisco earned $2.2 billion, or 40 cents per share, compared with $1.8 billion, or 33 cents last year. Excluding items, Cisco would have earned 48 cents per share, a penny above the average estimate among analysts polled by FactSet.

Revenue rose 7 per cent from last year to $11.6 billion, matching analyst projections. In its Europe, Middle East and Africa region, revenue rose just 4.6 per cent, while U.S. revenue was up an even more anemic 3.2 per cent from a year earlier.

However, Cisco issued a weak outlook, forecasting fiscal fourth-quarter sales growth of 2 per cent to 5 per cent year over year, and adjusted earnings of 44 cents to 46 cents per share. Analysts had predicted adjusted earnings of 49 cents per share on 7 per cent revenue growth.

Cisco's outlook sparked worries that Cisco might be about to fall into a slump similar to the one that it exited late last year after trimming about $1 billion in costs.

Shares of the company were lately down 0.67 per cent, trading at $16.20 as at about 2 pm EDT.

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