Cisco Acquires Israel’s Intucell for $475 Million

Networking giant Cisco Systems said today it will spend $475 million to acquire Intucell, an Israel-based wireless technology company.

Intucell was founded in 2008 and is backed by about $9 million $6 million in venture capital investments from Bessemer Venture Partners. It specializes in enabling wireless cell towers to communicate with each other, and uses software to expand and shrink their wireless cells on a real-time, as-needed basis to avoid service disruptions for users where wireless phone traffic is crowded. It also allows wireless networks to repair themselves.

AT&T was an early Intucell customer and has deployed its technology throughout its footprint of wireless infrastructure.

The deal fits with Cisco in two ways. First, Intucell does business with wireless service providers that are part of Cisco’s bread-and-butter business. Second, it brings some software capabilities to the table that are fundamentally similar to the software-defined networking paradigm that has Cisco and other networking companies so excited these days. The idea is basically this: Software controls can define and dynamically control the size and configuration of a network, rather than swapping out hardware.

“We believe management and optimization software for networks is increasing in importance and the acquisition reflects Cisco’s desire to add more software-oriented capabilities,” ISI analyst Brian Marshall wrote this morning in a short note to clients on the deal.

Cisco shares fell slightly on the news and were trading at $20.80 by mid-morning. The shares are up 39 percent from their 52-week low of $14.96, reached in August.