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Article from GigaOm.

Vyatta, a company providing open source networking software, has raised $12 million in expansion round financing as the entire networking field finds itself on the cusp of fundamental changes. The round, its fifth, was led by HighBAR Partners and brings Vyatta’s total fundingto $45 million. Also participating in this round are existing investors JPMorgan, Arrowpath Venture Partners and Citrix Systems.

Vyatta launched its first product in 2006, but has shifted from a focus on its open source routing software to delivering software that handles a wide range of networking functions. The company now has more than 1,000 customers and hopes this round of funding will help it expand as networking enters a new phase.

The networking world has changed drastically, thanks to a sharp increase in virtualized servers. Suddenly the static networking infrastructure no longer works as well when it is easy for developers to spin up a virtual machine on the fly. All those dynamic VMs however still have to connect to the network, as well as a lot of gear, such as firewalls. Plus, policies, such as those associated with HIPAA compliance or security issues all require knowledge of the network.

Kelly Herrell, Vyatta’s CEO, said that in the last six months or so, Vyatta has gone from seeing about 20 percent of its customers interested in its virtualization product to about 50 to 60 percent today. Herrell called it, “a head-snapping change.”

Vyatta’s software is an OS that allows a customer to program out its network topology on demand to adapt to the constantly changing underlying infrastructure. Other companies, such as Embrane, are trying to offer these tools, and still more are offering some type of holistic and abstracted network view. Vyatta believes its advantage is that its long history in building networking software helps it rise above the newcomers to the field as well as its many customers that are using its software in their data centers in production environments.”

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Here is some news from Reuters.

“NEW YORK (Reuters) – When it comes to Cisco Systems Inc (CSCO.O) and dealmaking, the prevailing sentiment in Silicon Valley is: You can’t predict what Cisco will buy next, but you can see why it fits.

The world’s largest maker of corporate networking gear is known for its voracious dealmaking appetite, buying dozens of companies every year and digesting them quickly and efficiently to broaden its already wide-ranging business.

Cisco has led the tech industry’s charge out of the recession-induced lull in mergers and acquisitions, announcing two big deals in two weeks: wireless equipment maker Starent Networks (STAR.O) for $2.9 billion and Norwegian video conferencing maker Tandberg for $3 billion.

Analysts expect the San Jose, California-based company, which ended the last quarter with a cash balance of $34 billion, to keep up the dealmaking pace, especially now that some stability has returned to financial markets.

“The ability to expand in markets where we have been strong clearly has been a big part of what we’ve done in the past,” Hilton Romanski, Cisco’s vice president of corporate development, said in an interview on Tuesday.

“But the other major element is new market entry,” said Romanski, a former JPMorgan (JPM.N) banker who joined Cisco in 2000 and runs its global acquisition and venture investment strategy.

Cisco, which was founded in 1984, has spent about $56 billion on 174 deals so far, according to Thomson Reuters data. Along with its in-house team, Cisco occasionally uses a range of outside financial advisers, from Barclays PLC (BARC.L) to Lazard Ltd (LAZ.N).

Many of the acquisitions were start-ups or private companies with assets that bolster Cisco’s core business of making switches and routers that direct computer traffic.

But as the networking business has matured, Cisco has forayed into several new interconnected markets, such as Web-based video conferencing and online video.”

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