Cisco to Buy Starent Networks for $2.9 Billion

AT&T's wireless network has been criticized as it seems to crumble under the sheer weight of the iPhone's data capabilities. A Cisco - Starent Networks combo places the company in a good position, as more and more smartphones are introduced.

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Read our related stories on a few AT&T related problems. They could use Starent Networks' help.

ATT Corrects Pricing Misconceptions on MicroCell Service
AT&T iPhone MMS Launches Today
AT&T is About to Release iPhone MMS. So What?

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Cisco is plainly aware of AT&T's issues, as a statement on the Cisco - Starent Networks acquisition plainly notes. Ned Hopooper, Cisco's Chief Strategy Officer noted that the huge explosion of mobile data traffic has left a huge hole in "coverage." The company mobile data to double every year through 2013, with videos leading the way.

Cisco's note on video is telling. Prior to the Starent Networks buy, two weeks ago, Cisco paid $3 billion for Tandberg, a Norwegian maker of videoconferencing systems. Don't forget that in March, Cisco agreed to pay $590 million for Pure Digital, a start-up that makes the popular Flip Video line of video cameras.

Cisco had closed as $23.78 on Monday; Starent Networks closed at $29.07. Both stocks are up, with Cisco up slightly and Starent up to $33.92 at the time of this writing.