Cisco Systems to Acquire IPmobile, Inc.; Accelerating the Creation of 3G Wireless Mobile Internet Services.

Business Editors/High-Tech Writers

SAN JOSE, Calif.--(BUSINESS WIRE)--Aug. 1, 2000

Cisco Systems, Inc. today announced a definitive agreement to acquire privately-held IPmobile, Inc. of Richardson, Texas. IPmobile is a leading provider of software systems that enable service providers to build the next generation IP-based wireless infrastructure known as third generation or `3G' networks. 3G networks will enable a broad array of new and innovative wireless data and voice services. This acquisition underscores Cisco's strategy to drive the development and adoption of open, Internet-based protocols throughout communications networks.

Under the terms of the agreement, Cisco common stock worth an aggregate value of approximately $425 million will be exchanged for all outstanding shares and options of IPmobile. This acquisition will be accounted for as a purchase and is expected to be completed in the first quarter of Cisco's fiscal year 2001. In connection with the acquisition, Cisco expects a one-time charge of approximately $.03 per share on an after-tax basis for purchased in-process research and development expenses. The acquisition has been approved by the board of directors of each company and is subject to various closing conditions.

3G networks will allow the creation of the Mobile Wireless Internet, which refers to the convergence of Internet-related data services and mobile wireless services. The Mobile Wireless Internet is expected to be a large and fast growing market, serving more than one billion subscribers by 2004. 3G networks will be based on the Internet Protocol (IP) and will seamlessly merge with the Internet that exists today. IPmobile's technology strengthens Cisco's leadership as a network solutions provider in this emerging market and delivers on Cisco's commitments to its existing wireless partners.

IPmobile is a leading developer of IP Radio Access Networks (IP-RAN) that will connect wireless base stations to the Internet in 3G networks. RANs control and manage the radio networks between the user devices and the base stations, while providing access to data and voice services. IP-RANs, based on open standards, increase competition, lower costs and increase the functionality and services available to customers.

IPmobile, Inc. was founded in 1999. The 81 employees will be led by IPmobile CEO Russell Davis and report to Edward Paradise, vice president and general manager of the Technology and Mobile Business Unit (TMBU) in Cisco's Service Provider Line of Business.

About Cisco Systems

Cisco Systems, Inc. (Nasdaq:CSCO) is the worldwide leader in networking for the Internet. News and information are available at www.cisco.com.

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