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IBM, Cisco ink alliance
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August 31, 1999: 1:08 p.m. ET
Big Blue to supply $2B in parts, technology, services to Net gear leader
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NEW YORK (CNNfn) - IBM struck a deal Tuesday to supply Cisco Systems Inc. with $2 billion in computers, components and services over the next five years.
The agreement underscores IBM's commitment to providing e-business solutions as well as Cisco's core strength as an equipment supplier for Internet networks.
As part of the deal, Cisco (CSCO), the data-networking firm whose equipment serves as the backbone for most Internet networks, also will acquire routing and switching intellectual property from IBM 's (IBM) networking hardware division for an undisclosed sum. IBM will migrate its routing and switching customers to Cisco equipment.
Routers and switches transfer data among networks.
IBM's Global Services unit and Cisco also will jointly provide corporate customers with e-business and networking technology. Cisco will provide the networking gear, which will be installed and supported by IBM Global Services.
The alliance combines "IBM's strengths in servers, software, services and technology for e-business with Cisco's expertise in networking technology," James Vanderslice, senior vice president of the IBM technology group, said.
The two companies will work to develop networking products based on Internet protocol (IP) technology, which permits simultaneous voice, data and video transfer.
Selby Wellman, Cisco senior vice president, Internetworks Business Division, said a key focus of the alliance will be providing equipment and support to service providers as they make the switch to IP networks.
The companies said portions of the alliance are subject to government review.
The pact marks the latest in a string of contract wins for IBM's new technology group, which this year has landed more than $30 billion in alliances with technology companies, such as a March agreement to provide components to Dell Computer (DELL). IBM's services unit also will take a role in marketing Cisco services.
Shares of IBM, a Dow component, were unchanged at 123-3/16 in midday trading, while Cisco shares fell 9/16 to 66-3/16 on the Nasdaq stock market. 
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