Cisco Systems to Acquire PixStream Incorporated

SAN JOSE, Calif., August, 31, 2000 - Cisco Systems, Inc., today announced it has entered into a definitive agreement to acquire privately held PixStream Incorporated of Waterloo, Canada. PixStream is a leading provider of hardware and software solutions to distribute and manage digital video across all types of broadband networks. The acquisition supports Cisco's vision to accelerate broadband deployments and build networks that enable service providers to offer data, voice and video services to businesses and consumers.

Under the terms of the agreement, Cisco common stock worth an aggregate value of approximately $369 million (US) will be exchanged for all outstanding shares and options of PixStream. This acquisition will be accounted for as a purchase and is expected to be complete in the first quarter of Cisco's fiscal year 2001. In connection with the acquisition, Cisco expects a one-time charge for purchased in-process research and development expenses not to exceed $.02 per share. The acquisition has been approved by the board of directors of each company and is subject to various closing conditions.

Video is expected to account for a growing percentage of traffic on the Internet, and the acquisition of PixStream is an important step in Cisco's plan to accelerate the delivery of broadcast-quality video over broadband networks. Cisco is the number-one market leader in broadband cable systems and the number-two market leader in broadband DSL systems.

PixStream's technology extends Cisco's broadband market leadership into video services, allowing cable, DSL and wireless providers to deliver a single end-to-end solution for the delivery and management of broadband video services. Cisco's strategy is to enable its customers to provide Internet or IP-based entertainment services such as broadcast-quality TV, video-on-demand (VOD) programming and multi-player games over broadband DSL, cable and wireless networks.

PixStream was founded in 1996. The 156 employees will report to Lou Santora, vice president and general manager in Cisco's Service Provider Line of Business.