Rumor Mill: Enterasys to Buy Extreme

Arthur Cole

Word on the street is that Ethernet switch maker Enterasys is looking to buy up rival Extreme Networks in a move designed to shore up its forces in the fight to wean market share away from Cisco.

 

Although both companies have been mum on the subject, the rumor is getting a workout on Wall Street, which has bid Extreme's shares up nearly 6 percent to $3.25, according to this report on Barron's. That would give the company a market capitalization of close to $400 million, which is a bargain for a firm that does about $350 million in annual sales.

 

But even if the two firms were to join forces, they would command less than 5 percent of the overall enterprise switch market, compared to upwards of 70 percent for Cisco. Still, Enterasys would benefit from the fact that competing patent-infringements suits that both companies have brought against each other would disappear.

 

Enterasys recently introduced the D-Series Gigabit Ethernet switch designed for guest networking applications.


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