News Release

Cisco Systems Purchases Equity Stake in Terayon Corp.

Agreement Marks Cisco's Third Recent Cable Data Infrastructure Announcement
Jan 15, 1996

San Jose, Calif -- January 15, 1996 -- Cisco Systems Inc. today announced anagreement to purchase an equity stake in privately held TerayonCorporation , an innovator in the fast-growing field of cable-baseddigitalcommunications. The investment is intended to accelerate the delivery ofadvanced technology and products to service providers who are exploring theuse of cable television systems for Internet access, electronic commerce,education and other services such as special interest user groups. Thecompanies did not release the financial terms of the equity relationship.

For its investment, Cisco will use Terayon's Synchronous Code DivisionMultiple Access technology (S-CDMA) and gain a seat on Terayon's board ofdirectors. Cisco will also collaborate with Terayon on the design,manufacture and marketing of a "head-end" or high-capacity cable deliverysystem that incorporates Cisco's hardware and software expertise. The useof Terayon's S-CDMA in this cooperative effort should result in anintegrated cable-based digital communications module for Cisco products.S-CDMA has the potential to eliminate the "upstream" barrier cableoperators are experiencing in bringing cost-effective high-speed data(e.g., the Internet) and digital video communication support to HybridFiber/Coax (HFC) networks.

Cable Market Shows Promise

Cable system operators are among the service providers exploring thegrowing deployment of residential high-speed networks, building off theirexisting network infrastructure and customer base. According to theNational Cable Television Association, 96 percent of homes are passed bycable, and there are 61 million residential cable subscribers.

The investment in Terayon is Cisco's third announced activity in the areaof high-speed data communications over cable systems. These actions arepart of a strategy to diversify Cisco's offerings to the small office, homeoffice and consumer markets. In November 1995, Cisco announced agreementswith both Zenith and Toshiba/Time Warner.

Cisco's announcement with Zenith concerned joint development of head-endand subscriber units for HFC systems. This non-exclusive agreement willhelp businesses sell into cable properties that use or plan to use Zenithmodems. The development involves the porting of Cisco IOS(tm)software tothe current Zenith HomeWorks(tm) Universal cable modem and a new modemunder development. Cisco IOS software is a sophisticated networkingsoftware suite that ensures robust, reliable internetworks by supportingboth LAN and WAN protocols, optimizing WAN services and controllinginternetwork access. The new Zenith modem will have spread-spectrum returnpath and VSB-16 modulation on the forward path and plans to have aprototype ready by the National Cable TV (NCTA) show in April.

Toshiba Corporation announced Cisco will help it participate in a series oftechnical trials using a high-speed system for data transfers over cablenetworks in San Diego, Calif. The trials will run until the end of May1996, and will be jointly conducted with Time Warner Cable's (TWC) SanDiego Division. Toshiba's trial system comprises all hardware and softwarerequired to operate the system, from the head-end and distribution hubsoperated by CATV companies to a new generation of high-speed cable datamodems developed by Toshiba and installed at the users' premises.

Corporate Background

Terayon Corporation is a leading innovator and manufacturer of innovativesolutions for the rapidly growing market for high-speed data and voicecommunications over cable networks. The company, headquartered in SantaClara, Calif., was founded in 1993 and has 45 employees. For moreinformation about Terayon and its technology, call the company at (408)345-9321 ext. 321 or visit their World Wide Web site

Cisco Systems (NASDAQ: CSCO) is the leading globalsupplier of enterpriseinternetworking solutions, including routers, LAN and ATM switches,dial-upaccess servers and network management software. These products, integratedby the Cisco IOS (TM) software, linkgeographically dispersed LANs, WANsand IBM networks. Cisco news and product/service information are availableat World Wide Web site Cisco is headquartered in SanJose, Calif.

Cisco IOS is a trademark of Cisco Systems, Inc. Cisco, Cisco Systems andthe Cisco Systems logo are registered trademarks of Cisco Systems, Inc.All other trademarks, registered or otherwise, are the property of theirrespective holders.

Posted: Fri Jan 19 12:00:29 PST 1996