Cisco confirmed it will acquire CoreOptics, a privately held designer of digital signal processing tools for high-speed optical networking. According to Cisco, it will use those tools to provide 100Gbps transmission technology to service providers wrestling with the demands of IP video, mobile infrastructure and cloud-based services.

Cisco will pay about $99 million in cash and retention-based incentives for CoreOptics, which is based in US, but according to Cisco it has the majority of its employees in Nuremberg and Gerlingen, Germany.

Cisco expects the deal to close in the second half of calendar 2010 and stated that CoreOptics employees will become part of Cisco's Service Provider Technology Group.

"With this acquisition, Cisco reinforces its commitment to continue to invest in its core networking business and to deliver IP next-generation networks at 100Gbps and beyond," said Surya Panditi, Vice President and General Manager for Cisco's Service Provider Access and Transport Technology Group, in a statement.

The acquisition of CoreOptics is one of Cisco's first major optical networking moves in years and comes more than a decade after its acquisitions of Cerent and Monterey Networks in 1999. CoreOptics should bring Cisco into closer competition with rivals such as Alcatel-Lucent, Huawei and Ciena, the latter of which acquired Nortel's optical networking and carrier Ethernet business last fall.

Cisco also will be adding to its presence in a market that's once again growing; according to a January report from the Dell'Oro Group, worldwide optical transport equipment revenue is expected to resume growth this year and climb to about $16.6 billion by 2014.

Dell'Oro currently has Cisco ranked No 10 in market share in multi-service provisioning platforms (MSPP), led by the ONS 15454 SONET/SDH platform it acquired from Cerent.

In its statement, Cisco also cited internal research suggesting global IP traffic will increase at a compound annual growth rate of 40 percent from 2008 to 2013, creating a need for better, stronger products for service providers.

CoreOptics is Cisco's second announced acquisition this week—Cisco also said it would acquire consumer product consultancy Moto Development Group—and adds to a streak of Cisco acquisitions that's continued largely unabated for years.