Cisco Systems, Inc., (NASDAQ: CSCO) has made an investment in Nuova Systems, Inc. to accelerate next-generation product development in the data center.

Cisco has committed certain technology and $50 million of funding to Nuova Systems with the possibility of up to $42 million in additional funding in the future. The subsidiary will be approximately 80% owned by Cisco, with the remaining 20% interest held by employees of the subsidiary.

INFO SOURCES

Cisco Systems, Inc. (NASDAQ: CSCO)

FIRMS

Nuova Systems has 76 employees and is based in Santa Clara, California. Nuova Systems was founded by leaders in the networking and data center space, including former Cisco executive Mario Mazzola.

TRANSACTION

Cisco has committed certain technology and $50 million of funding to Nuova Systems with the possibility of up to $42 million in additional funding in the future. The subsidiary will be approximately 80% owned by Cisco, with the remaining 20% interest held by employees of the subsidiary. Cisco has the option to purchase the remaining 20% interest in this subsidiary. Should Cisco decide to exercise this option, the transaction would occur in late fiscal year 2008 or early fiscal year 2009. The potential payouts made under the call option are primarily based on the success of Nuova Systems' products sold through Cisco, with a minimum potential payout of $10 million and a maximum total payout of $578 million.