Cisco Clinches Deal for NDS

NDS, formerly owned by private equity fund Permira and News Corp. (NASDAQ: NWSA), develops software that provides secure delivery of video content to digital TVs, digital set-top boxes, PCs and mobile devices. News Corp. uses the company’s products to control availability of channels to its customers.

NDS holds a 24% share of the global market for this type of product, which is used by cable and satellite TV providers to limit access to paid subscribers. In the U.S., Motorola and Cisco were the market leaders prior to this acquisition. Google Inc. (NASDAQ: GOOG) has not yet indicated what its plans for the Motorola product are, but the direction for development probably will be toward building an “open” platform for IPTV vendors to use for controlling content distribution.

Competition in the technology is likely to come primarily from cable and satellite operators themselves, rather than Cisco’s usual networking rivals like Alcatel Lucent (NYSE: ALU), Juniper Networks Inc. (NYSE: JNPR) and JDS Uniphase Corp. (NASDAQ: JDSU).

Cisco’s shares are down about 4.4% this morning at $15.34, in a 52-week range of $13.30 to $21.30. The share price drop likely is due mostly to yesterday’s announced layoffs and what they mean for the company’s future business.

Paul Ausick