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By Marguerite Reardon, 27 July 2005 09:20

NEWS Cisco Systems has agreed to acquire privately held Sheer Networks, which makes network and service management products, in a deal valued at up to $122m.

Cisco said on Tuesday it will pay $97m in cash and options for the San Jose, California-based company. But if certain development and product milestones are met after the close of the transaction, Cisco will boost that figure by $25m. Cisco expects to close the acquisition in its first fiscal quarter, which begins 1 August.

This is the second acquisition Cisco has announced in less than a week. On Friday, Cisco said it will pay $61m in cash for consumer electronics company Kiss Technology.

Technology from Sheer will be used to develop Cisco's next-generation management products for service providers and large businesses, Cisco said. Sheer develops software that enables operational and billing systems to use more-accurate data. Essentially, the software acts as a mediator between the network devices and the operational and billing systems, giving end users a simplified interface into complex operational and billing programs.

Sheer's technology will also enable other hardware and software vendors to develop and deliver applications that can more easily interoperate with Cisco's products and management software, the company said.

Cliff Meltzer, senior vice president for Cisco's Network Management Technology Group, said in a statement: "Our blueprint for Cisco network management includes a common services platform on which applications are delivered and the ability to support management applications from Cisco and other vendors. Sheer has a similar philosophy and parallel architecture which will accelerate our delivery of Cisco's next-generation management platform and advanced applications to our service provider customers."

Sheer was founded in 1999 and has 100 employees in San Jose and Petach Tikva, Israel.

Marguerite Reardon writes for CNET News.com