Cisco Buys a Liberate Slice

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Cisco Systems Inc. has invested $100 million in interactive-television-software provider Liberate Technologies in return for a 3.88 percent stake in the company.

The investment makes Cisco the third-largest investor in Liberate.

Liberate and Cisco will co-sell and co-market products to network operators worldwide as part of the agreement.

By partnering with Liberate, Cisco, which has been pushing an aggressive open-standards strategy, gains access to a missing link in its interactive-television puzzle: open-standards software for digital set-tops.

"We believe interactive-television services will really take off, and we think there's an opportunity for Liberate to run over our equipment," Cisco spokeswoman Caroline Brown said, noting that Cisco's arrangement with Liberate is nonexclusive.

Analysts were optimistic that the deal would be good for both companies.

"This gives [Liberate] another arrow in their quiver as they go into agreements with the major MSOs," Dain Rauscher Inc. analyst David Lee Smith said. "[The Cisco investment] gives them more credibility and more selling power. And the $100 million doesn't hurt, either."

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