Buyers and sellers: Cisco, Qwest

By SUSAN RUSH
From CED Broadband Direct, August 20, 2002

Cisco Systems Inc. snatches up storage switch maker Andiamo Systems Inc., while Qwest Communications International Inc. finally unloads its directory business.

Cisco buys Andiamo
Cisco Systems' Andiamo Systems buy has given the networking company an inroad to the fiber channel Storage Area Networking (SAN) market. Cisco will fork over as much as $2.5 billion in stock for the privately held company.

Andiamo's technology blends the benefits of data networking and storage networking, Cisco CEO John Chambers said. The acquisition gets Cisco's foot in the storage networking market, where the company believes it has the potential to be number one or two in the sector.

In connection with the announcement, Cisco has introduced a new line of intelligent storage switched developed by Andiamo. The products will be available in the fourth quarter.

The final price Cisco will pay for Andiamo will be based on Andiamo's sales for the three months prior to the close of the sale, and it could range up to $2.5 billion.

Andiamo is the fourth small company Cisco has acquired this year. Chambers has said the company intends to snatch up eight to 12 small- to medium-sized businesses by the end of the year.

Qwest finds buyer for yellow-page biz
After months of looking for a buyer, Qwest says it will fetch roughly $7 billion for its yellow pages business, dubbed QwestDex. The two-part transaction will give control of the business to The Carlyle Group and Welsh, Carson, Anderson & Stowe. Stage one of the sale, valued at $2.75 billion, will give the financiers control of the QwestDex operations in Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota. This portion of the sale is expected to close in the fourth quarter. In part two of the sale, the private equity firms will fork over $4.3 billion for the operations in Arizona, Idaho, Montana, Oregon, Utah, Washington and Wyoming. Phase two is expected to close next year.

The communications company plans to use the proceeds from the sale to help lighten its debt load. "The sale of QwestDex is a significant part of our plan to deliver and strengthen our balance sheet and will allow us to focus on maximizing the profitability of our core operations," Qwest Chairman and CEO Richard Notebaert said in a statement.

Qwest, which is the subject of federal and criminal investigations surrounding its accounting practices, recently announced it had misstated more than $1.1 billion in transactions. The company plans to restate earnings from 1999 to 2001.

News of the sale gave investors something to smile about. As of 10:11 a.m. EDT, Qwest shares were up nearly 26 percent to $2.82.